Just over one year ago, TiE Angels was started as an experiment by the Silicon Valley (SV) Chapter of TiE. Short for “the Indus Entrepreneurs,” TiE is the world’s premier non profit organization promoting entrepreneurship. The Angels seem to fit perfectly with TiE’s charter–to inspire the next generation of entrepreneurs and to educate and mentor them. TiE had been doing this with great success for close to 20 years but somehow it did not provide an organized platform for angel investing until August of 2010.
As noted in the previous article, TiE Angels have funded 10 start-ups during the last year from over 160 companies that have applied. The average deal is in the range of $200K to $650K, which is enough for many non-capital intensive start-ups to keep going.
Review of Start-Ups Funded
Here are some of the companies that have been funded by TiE Angels. There are two other deals that are in pipeline which are not “closed” yet, so cannot be disclosed at this time:
- Vyycore : Semiconductor IP for improving the power efficiency of power amplifiers used in handsets, wifi access devices and base band stations.
- GlassBeam: Cloud based Product Analytics company focused on providing business value to high tech product manufacturers.
- ActionRun: Automatic treatment communication engine for dental office to improve revenue generation
- Vigilent (formerly Federspiel Controls- a company we spotlighted in our 1st TiE Angels article): Artificial Intelligence (AI) based, dynamic cooling technology to protect uptime and deliver energy savings of up to 50% to large data centers
- SalesPortal: “Google AdSense” for phone – a real-time auction-based online marketplace to buy and/or sell live phone leads.
- Claritics: Real time analytics for social media
- Focal Point Energy: Industrial water heating solution based on thin film solar technology
- Ya-Town: enable local community interactions with trusted, easy-to-use Neighborhood Social Networks, backed by large-scale geocoded data & technologies.
Perspective and Process
What’s unique about TiE Angels, is the combination of structure, process, discipline, depth of knowledge and domain expertise of members. There are 9 individuals on the TiE Angels steering committee, which does first level screening of the start-up companies that apply for funding.
The process from receipt of the funding proposal to completion of due diligence is incredibly quick, with a goal of 30 days.
After initial evaluation of their proposals, a selected number of start-ups, usually 6 to 8, are asked to make preliminary presentations to the steering committee. The 9 people on the Steering Committee listen to 10 minute proposals from these start-ups, followed by a 5 minute round of Q &A. Steering Committee members than discuss the prospects amongst themselves. When a consensus is reached, three or four finalists are invited to present to a much large audience (60-70 people)at the next TiE Angels monthly meeting.
After presentations at the monthly TiE Angels meeting, attendees fill out an “interest sheet” to indicate their interest in a potential investment ($25K to $100K per Angel investor) in any company presenting and if further due diligence is needed. The most popular start-up funded drew 12 investors that put in a total of $500K in that company.
The range of investment per company funded has been from $200K to $650K. With all the web based and cloud computing/storage tools available, it takes a lot less capital to bootstrap a start-up company (especially software based products or services). No side deals are allowed between a TiE Angel investor and the company being funded. Full disclosure of any relationship with the company is mandatory before the investment is accepted.
Post Investment Advice and Assistance
Most of the investors in TiE Angels are successful entrepreneurs themselves, which enables them to provide vital business contacts and mentoring to the young companies they invest in.
Typically, one TiE Angel member is placed on the Board of Directors of a TiE Angels portfolio company. That individual not only has invested in the company, but has expertise in their area of business and expressed a keen interest in working directly with the company. It’s signicant to note that this TiE Angels Board member is pursuing a voluntary activity. Board members are not given any special stock option grant or compensation beyond their individual investment with their fellow TiE Angel investors in the specific company.
How To Become a TiE Angels Member
Currently, participation in TiE Angels is free of charge, including monthly dinner meetings. However, potential applicants must be invited to join by a fellow TiE Angel or TiE charter member. At that time they fill out an on-line application which is reviewed by the Steering Committee. Note that applicants are expected to make at least one $25K (or more) investment in a start-up that the TiE Angel members agree will be funded. In other words, membership is not for curiousity seekers who only want to learn the ins and outs of angel investing.
Assessing 1st Year Progress
TiE Angels Chairman Venk Shukla wrote in an email, “Based on the level of activity so far, it is obvious now that there existed a huge unmet need from the entrepreneur side and from the side of angel investors. TiE as an organization exists to promote entrepreneurship so the success of TiE Angels so far is really a testament to the quality of TiE ecosystem that attracts quality entrepreneurs.”
Venk added, “Compared to TiE, other Angel Investor groups don’t have access to such deep-domain experts and the kind of breadth and depth of expertise across such a wide range of fields.”
In addition to attending monthly meetings, TiE Angel members get training in angel investing from seasoned veterans. TiE Angel members can chose to make individual investments based on a specific theme (e.g. consumer Internet, cloud computing, fabless semiconductor, etc) or make a broader diversified allocation to start-ups in different industries or market segments.
After one year, we can confidently state that the TiE Angels program is working even better than initially envisioned. The program has attracted interest from other TiE chapters, venture capital firms and start-ups from outside Silicon Valley. We think it’s a great resource for start-ups flying below VC radar screens, which are seeking $500K or less in funding. Those companies also benefit from post investment advice from experienced TiE Angel entreprenuers, as described in this article.