Angel Funding for Startups

The Tech Entrepreneur Podcast

Excerpts of a recent panel discussion offered by the MIT Enterprise Forum in a Get Smart program entitled "Angel Investing. It's Right for Many Startups. Is it Right for Yours?"

The program was hosted by Nutter, McClennen and Fish, LLP, a Boston-based law firm with corporate, litigation and IP practice, and was held on October 30, 2012, at the law firm's Louis Brandeis conference center, in downtown Boston.

Panelists were from Boston Harbor Angels, a Boston-based angel investing group made up of business leaders who invest in high-growth, early-stage companies. Since 2004 the group has made investments in companies in medical devices, IT, consumer products, business products, specialty materials, Internet, aviation, etc.

In the session, you'll hear from Mic Williams, the founder and president of Boston Harbor Angels. He has been an investor for over 34 years, with investments ranging from commercial real estate to manufacturing, mining, movies, lumber products, ships and a television enterprises. Since he founded the Boston chapter of Keiretsu Forum in 2004 and then Boston Harbor Angels in 2006, he has personally invested in more than a dozen "portfolio” companies.

You will also hear from Jeff Arnold, a member of Boston Harbor Angels and the CEO of Arnold Strategies, LLC, which assists early stage and growth companies in strategy, marketing, financing, organizational development and strategic partnerships. He was formerly a CEO of multiple technology and life science companies who raised over $140 million in venture capital and public financings and achieved four exits through acquisition and IPO. Jeff is a mentor to early stage companies at the MIT Venture Mentoring Society, on the grant review board at the MIT Deshpande Center and an investor with Boston Harbor Angels and Mass. Med. Angels. He was formerly Chairman of the Greater Boston Chapter of the American Heart Association. He received a BSEE from MIT in 1972.

And, finally, you will hear from Bill McPhee, also a member of Boston Harbor Angels who currently serves as the director of outsourced business development services for Health Advances LLC, a life science strategy consulting boutique. Bill has 25 years experience in transactions, strategy and operations consulting and venture capital. He has served as founder and managing general partner of Mi3 Venture Partners, an early stage life science fund; founder and managing director of Lucas, McPhee & Co., an international strategy firm; and, a consultant at Bain & Co.

You can read more about the panelists and the MIT enterprise form of Cambridge get smart program at http://www.mitforumcambridge.org/events/get-smart-on-angel-funding

Here's a little background . . .

Angel investment in startups totaled over $22 billion in 2011 and funded some 66,000 companies, according to UNH’s Center for Venture Research. With average funding-round sizes well over $500k, angel groups are increasingly joining forces with other investors to bring that average closer to $1.5 Million. So says the Halo Report, which also notes that Internet, healthcare and mobile/telecom companies are the largest beneficiaries of those monies.

So who are angel investors? Many are former successful entrepreneurs, who provide advice, in addition to money, to target companies. Angels, however, can also be individuals of lower wealth and/or with non-entrepreneurial background who are drawn to startups for a higher rate of return than might be expected in the stock market, notes the Kauffman Foundation.

The popular press suggests that venture funding is the key to every startup’s success. But that sort of funding comes at a high price in terms of equity and performance expectations. Angels expect equity and performance, too—yet at levels better geared to the realistic trajectories of many startups. Angels, according to the Wall Street Journal, are a “good funding source to consider after you’ve tapped your friends and relatives.”