Boulder company offers ‘angels’ tips

Would-be investors in startups get advice on making choices

Several Denver-area groups offer advice for entrepreneurs looking to fund their
ventures, from panel discussions to all-day pitch sessions.

By Janet Forgrieve, Rocky Mountain News

At Angel Boot Camp in Boulder on Thursday, experts addressed the other side of it,
offering advice to would-be angel investors on how to choose companies to invest in.

The daylong seminar was the first of its type put on by the Boulder-based DaVinci
Institute, an entrepreneurial think tank that’s trying to become more practical and
membership-based, said Chairman Kevin Johansen.

Angel investors are individuals who, usually in exchange for equity, invest relatively
small amounts of their own money and expertise in very early stage start-up ventures.

Other than those differences, the successful ones are thinking more and more like
venture capital investors, said speaker Joe Bell, director of the Entrepreneurship
Center at the University of Northern Colorado.

Like VCs, angel investors today want more than ever to see that the entrepreneur has
a huge stake in the company before they’ll invest, he said.

"They want you maxed out on your credit cards, with a third mortgage on your house
and two kids at risk," he said.

"There’s money out there, but they want to have a much greater degree of
confidence."

Both Bell and speaker and serial entrepreneur Wayne Greenberg stressed that the
most important thing investors need to evaluate in a potential investment is the
management team.

Doing your homework on the people who are running the show is time-consuming but
crucial, said Greenberg, who sits on the board of venture capital firm Enertech Capital
Partners.

Find as many people to talk to as possible, to evaluate not only the business acumen
and experience of the founder and team, but also their personal integrity, he said.

Talk to all the usual sources, including customers if there are any, and also talk to some
less obvious ones, including ex-employees.

"Lack of due diligence is by far the greatest regret angels have," he said.

One of the attendees, would-be entrepreneur Mavis Salazar, wants to start a bilingual
e-learning company. Formerly a multimedia specialist with Louisville-based Storage
Technology Corp., Salazar had been searching for venture capital investors to help her
find the $250,000 she needs for equipment and technology.

But now she sees that, at her stage – she’s currently writing her business plan – it’s
more likely that she needs an angel.

"At this point, I’m finding out what the students need and finding the right players to
produce it," she said.

http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_1288026,00.html