Talk to the Angels May 06

I've been running the Talk to the Angels program for the MITEF of DC/Baltimore for the past 4 years. Tuesday night's event was very good. A few entrepreneurs had their eyes opened upon what investors would look for. Talk to the Angels is a closed door session for entrepreneurs and investors only. There’s a lot of sharing of information, sometimes stuff that the companies don’t want to let out. But it’s also a place for some honest feedback from investors.

The format is pretty simple, companies get to describe themselves, ask a relevant question and the panelists get to respond. It can be a round table, or a Q&A session, depending upon the feel of the room and the make up of the audience and panelists.

The challenge is keeping everyone on schedule, making sure the questions will be interesting, for both the panelists and the other audience members (companies). Also trying to make sure that the panelists can provide answers within their expertise. Asking an internet expert what to do with a chemical processing plant is not the best use of time for either party.

Not everyone who applies can be invited, nor do all questions make sense. One thing we do try to avoid is the “how do I get financing?” question. Lots of other sources on that around the web, and around town. Similar questions are “What do I need to get financing”, “What do the companies you invest in have in common?”, “What kind of companies do you invest in?” etc.

The format/order of companies and questions, panelists, etc. all matter and can contribute to a good discussion.

If I do a good job in preparing, the conversations take a life of their own. Topics that are relevant to the audience get brought up, and themes emerge.

What are the incentives for the participants?
Well, for the companies, it’s a way to understand how an investor thinks, and get a more personal answer than a simple rejection letter saying “This is out of our space.” It’s also quite a bit of consulting work that’s given away for free.

For the investors in the room, one benefit is ego. They get to be treated like rockstars. But it’s also a way for them to see what is happening at the earliest stages. Most of the companies don’t have revenue, or customers, so these are raw start-ups. And while I don’t see checks written out at these events, the hope is in a year or two, the companies would have grown enough, developed enough, to get financing from professional institutional investors. And it won’t be a cold call, since the investor has already seen them before.

One final tidbit from the panel:
“VC's produce exits.” raw materials are cash and companies, and the results are exits with more cash.