Startup Investor Spotlight: The Angel Roundtable, ART

ART seeks companies which believe in “Smart Money”. As such, we work to coach our portfolio companies as appropriate to fully prepare them for future investment rounds.

Name of Angel Group / VC Fund: The Angel Roundtable, ART

Tony Lettich, Managing Director

Location: Tri-Cities, TN/VA

Website: www.theangelroundtable.com

Interviewee: Tony Lettich, Managing Director

There are numerous operating models being pursued by angel networks / funds and VC funds. How does your work? How does it differentiate you?

ART is an angel network made up of approximately two and one half dozen members. We filter, screen, review and complete due diligence on opportunities as a group. Hence, we share the efforts related to identifying and vetting opportunities. Once vetted, investment decisions are made on an individual basis by each member based on their interest and personal conclusions related to the opportunity. Interested members then invest as a group through a LLC investment Vehicle.

The skillsets of the membership of ART are diverse by design. Additionally, we are generally analytical in our processes. This results in our organization being highly disciplined from an investment standpoint. Entrepreneurs seeking smart money from investors strong in due diligence who can help them prepare for their future VC rounds will benefit from partnering with ART.

Are you an entrepreneur seeking to get a glimpse into the thinking of an angel investor?

In what industries and sectors do you invest? Are their specific industries, sectors or types of opportunities in which you don’t invest?

We invest in scalable companies in the following areas of opportunity:

Big Data
Clean Energy/Clean Tech
Cloud Based Software / Services
Digital Media
EdTech
FinTech
Medical Devices
Specialty chemicals

ART does not invest in capital intensive, family lifestyle or pharmaceutical opportunities.

Does your organization have any geographic preferences upon which you build your portfolio?

ART currently invests in startups from across the United States. However, we strongly prefer to invest in companies located in the southeast. We do not invest out of the United States at this time.

What key attributes do you look for when selecting companies for investment?

Successful companies pursuing investment from ART will possess a strong, coachable, passionate management team with a demonstrated ability to execute in the face of adversity. This team will be pursuing the solution of a market “pain-point” which is scalable and will typically have developed their product to at least the beta level. Some level of market validation is expected.

At what stage(s) of the startups’ development do you prefer to invest?

Startups in the late seed stage or early in the early stage are the preference of ART. Our objective is to create a portfolio of high potential, seed / early stage companies with initial traction and participate in both the initial and subsequent rounds as the startup develops and grows.

Tell us more about your team. Do you work with companies beyond the provision of funding? If so, how do you support them?

Our team is diverse, disciplined and analytical. I have experience with a highly successful corporate venture capital group with multiple successful exits including IPOs. As previously noted, our team possesses strength in due diligence. ART seeks companies which believe in “Smart Money”. As such, we work to coach our portfolio companies as appropriate to fully prepare them for future investment rounds.

Potential Due Diligence Showstoppers

Are there key startups which serve as examples of the types of investments you like to pursue? What specifically differentiates them?

flexReceipts is a great example of the types of companies in which we invest. It possesses a top tier, diverse, highly coachable management team. They provide specialized digital receipt solutions to retail business clients and have demonstrated traction in their market. A recent Y-Combinator participant, they are beginning the growth stage of their development.

Another example of an ART high potential portfolio company is FarmShots, which has also participated in one of Y-Combinator’s programs.

What trends in the startup world are you most excited about?

This is an exciting time to be involved in entrepreneurialism. With advances in technology, the development of crowdfunding models and the deregulation in the investment and business markets, we view this as a great time for the entrepreneur to pursue their startup dreams.

What else would you like to share?

ART has an initial investment appetite of $75K-$250K for opportunities of interest. If you believe you have a great idea, a high potential team / startup and otherwise meet our criteria, we would enjoy hearing from you and learning about your opportunity.

Are you familiar with other Angel Networks / Funds or VC Funds that you believe should be spotlighted? If so, we would like to hear from you. Tell us about them, sharing your comments below.

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Pam Goforth

Pam Goforth is Research Manager for FundingSage, which provides valuable information, tools and resources to entrepreneurs seeking to start, grow and fund a business.

Definitioner

Venture Capital / Venture Capitalist

LLC

Limited Liability Company

Bounce Rate

Website

An organized property made up of a group of connected pages on the World Wide Web, (Internet) that are considered a single entity.⁶

Entrepreneur

A person who organizes and operates a business or businesses, taking on greater than normal financial risks to do so. Entrepreneurs are the founders of startups and are the people angel investors support.⁷

Corporate Venture

An investment from one corporation in another, typically at an early stage for strategic reasons.⁷

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Angel Group

An organization composed of accredited investors which serves as a platform for them to coordinate investments in seed and early stage startup companies. The group members typically work together consolidating their resources, expertise and capital through informal networks or formal funds.⁶

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Portfolio

A strategic collection of startup companies invested in by an angel, angel group or Venture Capital Fund.⁶

Funding

This term is used synonymously with the words “financing” and “capital.” It refers to the amount of money that is needed for a business endeavor. For example, a new business owner may seek a certain amount of funding for their startup company. This “raised” capital can be used to launch their endeavor as well as to sustain their company until monetary profit can be generated.⁴

Venture Capital

Investment capital made available to high growth, scalable startups, typically beginning at the early stage, from a fund supported by accredited investors.⁶

Venture

Venture is often used for referring to a risky start-up or enterprise company.⁵

Startup

A startup is a new business venture / enterprise in its initial or early stages of development. These stages include the concept, seed, early, growth and mezzanine stages.⁶

Early Stage

The key characteristic is market development. The business is focused on sales and marketing and proving business viability.²
A state of a company that typically has completed its seed stage and has a founding or core senior management team, has proven its concept or completed its beta test, has minimal revenues, and no positive earnings or cash flows.³
This term generally refers to a young enterprise that is three years old or younger. During this phase, a company is still in its novel stages of development. They could be in the process of experimenting with new products or services that they intend to market in the near future and/or may have viable products that are already available to the public.⁴

Director

Person elected by shareholders to serve on the board of directors. The directors appoint the president, vice president and all other operating officers, and decide when dividends should be paid (among other matters).³

Portfolio Companies

Startups and other companies in which an angel group, venture capital fund or private equity firm have invested.⁶

Market

Based on supply and demand, this term refers to the societal arrangement whereby consumers purchase goods and services from businesses and individual sellers in exchange for currency. In economic relevance, the “market” can be divided into different industries, such as biotechnology, food, etc. The exchange between the consumer and seller contribute to a society’s market economy which greatly depends on these transactions for economic viability.⁴

Due Diligence

A process undertaken by potential investors — individuals or institutions — to analyze and assess the desirability, value, and potential of an investment opportunity.³
This is the process whereby individuals or groups of people conduct independent investigations regarding a particular matter. In the business world, investors conduct timely due diligence when inquiring about prospective investment endeavors. This may entail a background search of the company’s founders, review of the entrepreneur’s credit scores, and routine follow-up with references and associates, etc. New business owners, on the other hand, are encouraged to also conduct due diligence when finding a potential investor. Through due diligence, both the investor and entrepreneur has the opportunity to diligently analyze and assess each other for the potential of an investment opportunity and partnership.⁴
Due diligence is the process of investigation and evaluation, performed by investors, into the details of a potential investment, such as an examination of operations and management and the verification of material facts.⁵

Crowdfunding

“Crowdfunding” is the process of raising financial support for a venture via smaller amounts from many investors (“the crowd”), rather than the alternative pattern of larger amounts from a smaller number of supporters. Charities and philanthropies have traditionally employed both fundraising strategies (soliciting both the general populace, or crowd, as well as fewer wealthier donors), while businesses have usually taken the route involving fewer and larger supporters. Today’s internet has vastly increased the ability of fundraisers to communicate information, solicit and receive financial support from anyone on-line. Crowdfunding without the expectation of financial return, or with the promise of a specific good or service, are termed “donation-based” or “reward-based” crowdfunding, are in the nature of charitable solicitation or business marketing, and have never been illegal in the U.S. In contrast, soliciting funds in return for a ownership interest or expectation of repayment, are termed “equity-based” or “debt-based” crowdfunding (together grouped as “securities-based” crowdfunding), and have been until now governed (and effectively prevented) by federal and state securities law. One of the most significant parts (Title III) of the federal “Jumpstart Our Business Startups”, or JOBS Act of 2012 specifically enabled and legalized “security-based crowdfunding”, subject to a variety of regulations and restrictions.¹

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Corporate Venture Capital

Corporate venture capital is a subsidiary of a large corporation which makes venture capital investments.⁵

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Capital

Financial capital is a term that can refer to the money exchanged between entrepreneurs and investors during a business deal. Entrepreneurs need to raise capital for their startups while investors can provide them with the needed capital (or funding). Financial capital usually comes with interest, and new business owners can use their financial capital in purchasing real capital (or machinery or equipment) for their new business.⁴

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Pam Goforth

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