New Year, New Update

New Year, New Update

15:48 01 February in Blog
1 Comment

As we embark on a new year it seems appropriate to look back at where we’ve been and consider where we’re going. While that’s a good idea, I fear most of you may have more pressing issues so I will keep it brief.

We are starting the year with some assured payments to investors as the second stage of RetroSense escrow is distributed in March. That’s a great way to start the year! We also have substantial royalties at ABC moving the company to a stable base of operations. Clearly some strong wind at our backs.

So, here’s a quick updated on what’s new for 2018.

First, we’ve committed more time and energy to help us use a simple newsletter. This should help keep everyone updated on deals in the pipeline we are evaluating.

PORTFOLIO

We will also provide general information on the progress of our portfolio companies but there will be more detailed financial reports for those invested in the company. We will also continue to encourage our members to help support these companies through mentoring or coaching. Most CEOs have lots of sleepless nights and would benefit from some words of encouragement.

We will be rolling out a series of updated half-day workshops on Fundamentals of Angel Investing, Deal Structures, Building for Exits, Due Diligence, and Term Sheets.

EVENT LOCATIONS

As we grow, our membership is increasingly dispersed throughout the Great Lakes Bay area. Let me or Judy know of preferences for meeting locations.

We also could use new sites for smaller meetings, usually seating six to twelve guests. If you have a meeting room at your offices, we’d like to add you to our call list. Who knows what a band of angels might do to your conference room?

Four our fully-catered events, SVSU, CMU and the CMU College of Medicine graciously host events providing both rooms and catering. Let us know if you can think of others.

LESSONS LEARNED

I sent out thoughts on two important issues last month that I’d like to expand on briefly. First, how fast should we move in pushing a deal through? The answer is very simple – NEVER faster than the diligence supports. For example, Sean Ainsworth came to BWA hoping to raise $500K, but had to have funds actually transferred in less than a month. We were able to execute this for three important reasons. We were able to divide the work and at the same time run a series of calls and presentations. Parallel processing made this happen and landed 10% warrant coverage along with an additional $80K that showed up at closing.

This really is about our ability to distribute the work load and leverage one of the top performing angel networks in the country.

But, in the name of full disclosure, many of us committed to an investment in CycloSam that we lost because we couldn’t close fast enough. We were just completing diligence and working through the financial model when a large pharmaceutical company offered the company a very substantial term sheet. We moved to slow, but I think in the end we moved at the right speed.

The other lesson and our closing message – 50 just isn’t enough!

As we see vast amounts of local wealth moving every month as pensions, IRAs and 401Ks seek safe harbors in Wall Street markets, where stock prices continue to climb due to scarcity of new business formation. The number of publicly traded companies has been declining for years, so more money and fewer companies assures substantial price inflation in these companies that should be hedged.

Angel investments remain an outstanding hedge to balance the Wall Street risk. Remember how well angels did in 2008, and you’ll be well prepared for it regardless of which way markets go.

 

Ken Kousky

kkousky@ip3inc.com
1Comment
  • Paul B. Murray 14:37h, 27 February Reply

    Both our Midland office and Mt. Pleasant office are capable of handling meetings for 8 to 12 people. A couple days advance notice would be appreciated.

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