Following the seed stage of a new business or venture is the “Early Stage.” sometimes it is difficult to distinguish between these two stages. In the early stage, aspects of the company remain incomplete, although there is usually evidence of progress in the company’s development. Typically, the management team is incomplete, the product or service is still in development, or if developed is in the testing stage and has not yet gone to market on a commercialized basis. If the product is commercially available, it is generating revenue on a very limited basis. The company has filed for but not received any patents for the proprietary technology and their product and websites are usually identified as being “beta” versions. It is in the early stage that entrepreneurs typically begin seeking funding from accelerators, angels and VCs as their previous funding is typically provided by the founders, friends, and family, individual angels and occasionally accelerators. Early stage companies seeking financing are typically only a couple of years old. It’s a common practice to participate in an Accelerator or Incubator during this stage.
Angels are individuals who provide investment and intellectual capital to entrepreneurial startups. These resources are provided to startups in exchange for convertible debt and/or equity in the startup. In recent years, these investors began organizing into groups for the purpose of sharing the efforts related to identifying and assessing potential opportunities and pooling their investments.
Originating from the theatre industry, the term “angel” originally described wealth benefactors who provided funding for theatrical productions. Today it applies to high net worth individuals, (accredited investors under the definitions of such by the SEC) who provide seed capital for scalable, high growth companies. The Angel Capital Association and the Angel Fund, the major industry associations in the United States both promote membership rosters which exceed 200 groups.
There are two types of angel groups, angel networks and angel funds. Groups whose members participate actively in the identification, screening, and vetting of the investment opportunities, who make their own investment decisions for each investment opportunity, and who invest as a group through a shared investment vehicle, are generally described as angel networks. When the members of the group invest based on established criteria and guidelines and primarily utilize the support of third parties to identify, screen and complete the due diligence on the opportunity, they are generally identified as a fund. Under the fund structure, members commit capital and invest in all opportunities identified as appropriate based on the criteria established for the fund.
Angel investment carries with it a high degree of risk. As a result, angel investors usually seek returns of 10X within five years as most early stage investments fail, resulting in the angel losing their entire investment. These issues cause the angel investor to focus on developing a highly diversified portfolio, thereby reducing the risk of the overall investment. Analyses over time has revealed the typical stable angel group with diversified portfolio returns at a rate in the mid to upper teens to the low to mid-twenties on a percentage rate basis.
The statistics concerning angel groups and investment vary widely.
- Groups may have as few as 10 members or as many as 150.
- Some syndicate, some don’t.
- Some invest locally, regionally and nationally, even internationally, others invest only locally.
- Different groups invest in different industries and at differing levels.
- Smaller and newer groups may provide investments from $50K to $250K while large established groups may invest up to $1.5M or more.
It is therefore extremely important that the entrepreneur understand the angel groups structure, approach and criteria thoroughly. Otherwise, pursuing an investment from any given angel groups may be little more than a shot in the dark, wasting the entrepreneurs’ time and resources, something they have in extremely limited quantities.
Angel Capital Association
The Angel Capital Association, (ACA) is a “leading professional and trade association supporting the success of angel investors in high-growth, early-stage ventures.” With a membership of more than 200 angel groups and 12,000 angels / accredited investors, the ACA is a provider of professional development, industry representation, public policy advocacy and an array of benefits and resources to its membership.
ACA indicates its mission is “to fuel the success of angel groups and private investors that invest in high growth, early-stage ventures.”
AngelPool is one of the largest organization of angels and accelerators in the world. They have a membership of Over 200 angel groups including 5,000 angels which share knowledge, deals, best practices, and learnings with each other. They are comprised of over 500 volunteer leaders who graciously volunteer their time on our various boards, judging and mentoring. Their mission is to help angels, groups, accelerators, and funds profitably find and invest in the best tech disruptors and founders globally to drive jobs, innovation, and growth.
Alliance of Texas Angel Networks
The Alliance of Texas Angel Networks, (ATAN) is a non-profit organization established to facilitate cooperation between the angel investor groups in Texas. Over the last several years, these groups have worked together and shared investment opportunities and “know how”.
Appalachian Regional Commission
The Appalachian Regional Commission, (ARC) supports various activities in order to promote entrepreneurship and business development in the Appalachian Region. Their objective is to help diversify the region’s economic base and enhance entrepreneurial activity by developing and marketing strategic assets, increasing the competitiveness of existing regional businesses, and fostering the development and use of innovative technologies.
Angel Association New Zealand
The Angel Association New Zealand was established in 2008 to facilitate the efforts of business angel networks and early stage funds to work towards an agreed national vision. The Association desires to increase the quantity, quality and success rate of entrepreneurial investments in New Zealand facilitating the strengthening of the New Zealand entrepreneurial ecosystem.
The primary objectives of the association are to:
- Promote the growth of angel investment by encouraging and educating entrepreneurs, new angel investors and angel groups.
- Ensure the ongoing industry success by developing an industry strategy, providing education and encouraging collaboration among its members.
Angel Resource Institute
The Angel Resource Institute, (ARI) is a non-profit organization focused on providing information on best practices and educational information related to the field of angel investing. ARI’s programs include educational workshops and seminars, research projects and reports, and information about angel investing for the general public. Their programs are available to those interested in the early-stage capital including investors, entrepreneurs, policy makers, entrepreneurial support professionals, and many others.
Australian Association of Angel Investors
The Australian Association of Angel Investors, (AAAI) is a not for profit company which serves as the national voice of the early stage investment community. Their objective is to provide a platform for the growth of the early stage investment capabilities of Australia. They provide information and resources, a platform for collaboration and internationally recognized professional development programs to the countries angel investors and entrepreneurs. AAAI also advocates on behalf of the participants in the entrepreneurial ecosystem to shape policy and uphold professional standards.
Business Angels Europe
Business Angels Europe, (BAE) is the European Confederation of Angel Investing. It represents the European Business Angels’ Federations and Trade Associations. Its objective is to bring together the most active and developed countries operating in the angel markets in Europe and serve as the voice of angel investing on the continent.
Council for Economic Development
Membership of the CED includes a wide range of startup companies, maturing entrepreneurial companies, corporate partners, investors, academics, service providers, and individuals interested in entrepreneurship. The organization, located in the North Carolina Research Triangle provides education, mentoring and capital formation resources to new and existing high-growth entrepreneurs.
European Business Angel Network
European Business Angel Network, (EBAN) fuels innovation and growth throughout EMEA. Representing the early stage investor community, EBAN membership includes over 145 member organizations from 46 countries throughout Europe, the Middle East and Africa. Their members include angel networks, early stage venture capital and seed funds, electronic funding platforms, individual angels, crowdfunding platforms and accelerators.
Launch Tennessee, (LaunchTN) is a public-private partnership focused on supporting the development of high-growth companies in Tennessee. Their objective is to make Tennessee the No. 1 place in the Southeast to start and grow a business. LaunchTN is funded in part under an agreement with the State of Tennessee.
National Angel Capital Association
National Angel Capital Association, (ACO) was established as a non-profit in 2002 to promote and support the creation of a vibrant Angel community in Canada. The ACO provides Angel investors with a secure environment to network and collaborate.
ACO has more than 2,000 members across Canada. Their members are a diverse group of individual investors, Angel groups, and other industry partners that provide support to early-stage companies.
Pipeline Fellowship is an angel investing bootcamp for women which works to increase the diversity in the U.S. angel investing community and create capital for female social entrepreneurs. Launched in NYC in April of 2011, the Pipeline Fellowship has expanded from NYC to Atlanta, Austin, Boston, Chicago, Los Angeles, Miami, San Francisco, Seattle, and Washington, D.C.
Wisconsin Angel Network
The Wisconsin Angel Network (WAN) fuels the growth of capital in Wisconsin by operating as an umbrella organization providing services and resources to the early stage investing and entrepreneurial communities. It is part of the Wisconsin Technology Council’s overall economic development and job creation efforts. WAN is a Wisconsin public-private initiative operated by the Technology Council.
Several of these Angel Funds and Networks are spotlighted on our FundingSage Startup Investor Spotlight. Learn more about potential Angel and VC investors there!
Angel Funds and Networks
3C Capital (RAIN FUND NETWORK)
Aggie Angels Network
AIM – Auburn Angel Network
AIM – Central Alabama (Birmingham) Angel Network
AIM – Central Gulf Coast Investor Network
AIM – Gulf Coast Angel Network
AIM – Shoals Angel Network
Akron ARCH Angels (Akron Regional Change Angels)
Alliance of Angels
Angel Capital Group
Angel Investment Forum
Angel Investor Forum
Angel Venture Forum
Angels on the Water
Angelvision Investors LLC
ARC Angel Fund
ArcView Angel Network
Ariel Southeast Angel Partners
Arizona Tech Investos
Astia Angels – NYC
Astia Angels – San Francisco
Atlanta Technology Angels
Band of Angels
Baylor Angel Network
BC Angel Forum
BELLE Michigan LP
Bellingham Angel Investors BAI)
Ben Franklin Central / North Angels
Biltmore Angel Group
Blu Venture Investors
Blue Water Angels
BlueTree Allied Angels
Boston Harbor Angels
Brightstar Wisconson Foundation
Buffalo Angel Network
Capital Community Angels
Catalyst Fund, LLC
Central Florida Technology Ventures
Central Illinois Angels
Central Texas Angel Network
Charleston Angel Partners
Chattanooga Renaissance Fund
Chemical Angel Network
Cherrystone Angel Group
Clean Energy Venture Group
Coachella Valley Angels
Crossroads Venture Group
Delaware Crossing Investor Group
Dingman Center Angels
East Central Ohio Tech Angels
Eastern New York Angels
Element 8 Angels – (Formerly Northwest Energy Angels)
Enterprise Angel Group LLC
Excelerate Health Ventures
Executive Forum Angels
Family Media Angels
First Angel Network
Florida Angel Investors
Fort Point Angels
Frontier Angel Fund
FSI Angel Network
Georgia Angel Network
Go Beyond Network
Golden Angels Investors
Golden Seeds LLC
Golden Triangle Angel Network
Granite State Angels
Great Lakes Angels
Hivers and Strivers
Houston Angel Network
Hyde Park Angel Network
Ignition Point Capital Group
Impact Angel Group
Inception Micro Angel Fund
Jumpstart New Jersey Angel Network
K Street Capital
Lancaster Angel Group
Launchpad Venture Group
Life Science Angels
Long Island Angel Network
Louisiana Angel Network
Louisville Enterprise Angels
Main Street Venture Fund
Maple Leaf Angels
Marquette University Golden Angels
Mass Medical Angels
Maximize Angel Investments
Michigan Angel Fund
Mid Atlantic Angel Network
Mid-Atlantic Bio Angels
Midwest Venture Alliance
Mississippi Angel Network
Nashville Capital Network
NCIC Capital Fund
New Dominion Angels
New Mexico Angels Inc
New Richmond Ventures
New World Angels
New York Angels
Newfoundland& Labador Angel Network
NJIT Highlander Angel Network
NO/LA Angel Network
North Coast Angel Fund
North Country Angles
North Dallas Investment Group
North Texas Angel Network
Northern Michigan Angels
Northern Ontario Angels
Ocean State Angels
Oregon Angel Fund
P3 Alliance (Purdue Angel Network)
Piedmont Angel Network
Pine to Prairie Fund
Pittsburgh Equity Partners
Point Positive Inc
Puget Sound Venture Club
Queen City Angels
RAIN Source Capital
REES Capital LLC
River Valley Investors
Robin Hood Ventures
Rochester Angel Network
Rockies Venture Club
RTP Capital Associates
SAGE – Shasta Angel Group for Entrepreneurs
Salt Lake Life Science Angels
San Joaquin Angels
Sand Hill Angels
Sand Hill Angels LLC
Saskatchewan Capital Network
Seed Capital Fund of CNY
Seraph Capital Forum
Show Me Angels
SLO Seed Ventures
SoundBoard Angel Fund
South Coast Angel Fund
Southern Willamette Angel Network
Southwestern Ontario Angel Group
Space Angels Network
St Louis Arch Angels
Sustainable Local Food Investment Group
Tacoma Angel Network
Tamiami Angel Fund
Tech Coast Angels
Tech Coast Angels
Tech Coast Angels
Tech Coast Angels
Technology Concept Fund, LLC
The Angel Food Network
The ArcView Angel Network
Third Coast Angels
Thunderbird Angel Network
TiE Angels – Boston
TiE Angels – Silicon Valley
Triangle Angel Partners
Tribe of Angels
Tri-State Private Investors Network
Twin Cities Angels
Tyler Texas Angel Network
Upstate Carolina Angel Network
Urbana-Champaign Angel Network
US Angel Investors
Valley Angel Investment Fund
Vancouver Angel Technology Network
Vegas Valley Angels
Virginia Active Angel Network
Walnut Venture Associates
West Suburban Angels
West Texas Angel Network
West Virginia Angel Network
Wilmington Investor Network
WINGS – The Medical Technology Angel Group
Wisconsin Investment Partners
Wisconsin Super Angel Fund
Women’s Capital Connection
York Angel Investors
York Angel Investors
Corporate venture capital (CVC)
This is venture capital funding provided by major corporations to startup companies with a high potential for growth.
Funding is typically sourced through the capital budget of the corporation, as compared to that sourced from investors in the case of the independent venture capital fund. These corporate venture capital arms either invest in ventures that have some level of strategic synergies with their company’s business or they invest because of financial objectives.
The latter may make sense for privately held companies, but many would argue that financial returns should not be the objective of the publicly traded company. This is because, in theory, the public company investors’ interest is in the firm’s core business, and not necessarily in riskier venture investing. Should they be, they would likely be better served to invest directly through a venture capital fund or other private equity vehicles which is focused on such investments.
CVC bring administrative support, infrastructure, management and marketing expertise, and technology to the venture.
Like angel groups and venture capital funds, corporate venture capital arms invest in startups in all stages of development, from seed to the expansion, growth and mezzanine levels. Generally, their desired liquidation event is not an IPO. As indicated above, they tend more toward the acquisition of the startup.
FundingSage’s Listing of CVC Funds
Several of these CVC Funds are spotlighted on our FundingSage Startup Investor Spotlight. Learn more about potential CVC investors there!
301 Inc. (General Mills Venture Arm)
Abbvie Biotech Ventures
Alexandria Venture Investments
Ascension Health Ventures
Astellas Venture Management
AXA Strategic Ventures
BASF Venture Capital America, Inc.
Bertelsmann Digital Media Investments
BlueCross BlueShield Venture Partners
BMW i Ventures
Boehringer Ingelheim Ventures
Chevron Technology Ventures
ConocoPhillips Technology Ventures
DSM Venturing B.V.
eighteen94 Capital (Kellogg’s VC Fund)
Fosun RZ Capital
GV (Google Ventures)
IBM Venture Capital
InMotion Ventures (England)
Johnson & Johnson Development Corp
Juniper Networks Ventures
Kaiser Permanente Ventures
Kearny Venture Partners
Lenovo Capital & Incubator Group
Media Tek Ventures
Medtronic Venture Capital
Merck Global Health Innovation Fund, LLC
M12 (Microsoft Corporation)
Mitsubishi UFJ Capital
Motorola Solutions Venture Capital
MP Healthcare Venture Management
Nike Innovation + Fuel Lab
Novartis Venture Funds (Switzerland)
NTT DoCoMo Capital
NVIDIA GPU Ventures
Pfizer Venture Investments
Proctor and Gamble Ventures
Quintiles Transnational Corp (NovaQuest Capital Management)
Rakuten Ventures (Japan)
Robert Bosch Venture Capital
Roche Venture Fund
S.R. One, Limited (GSK)
Samsung Venture Investment
Sanofi Genzyme BioVentures
Shell Technology Ventures
Sony Innovation Fund
Swisscom Ventures (Cloud Innovation Lab)
Takeda Research investment
Tate & Lyle Ventures
Telstra Ventures (Australia)
Third Point Ventures
Toyota AI Ventures
Unilever Technology Ventures
UPS Strategic Enterprise Fund
Volvo Venture Capital
ZX Ventures (AB Inbev Venture Group) (backed by Anheuser-Busch InBev)
SMALL BUSINESS GRANT FUNDING
Grants are funds, provided by a party, (grantmaker) such as a governmental agency, foundation, corporation, trust or industry association to the benefit of the recipient, which are not required to be repaid. Such grants are usually based on an application or another form of written proposal or grant request. Grants are usually provided to fund specific projects or objectives and typically require certain compliance and reporting to the grant maker.
Despite media and internet marketing to the contrary, small businesses grants are few and far between.
Grants that are available tend to be focused on very specific areas, typically in technological research and innovation or technology transfer and development. Other limiting factors include types of companies (i.e., non-profits) or specific classifications like women or minority-owned businesses.
There are numerous websites that seek to lure the entrepreneur into believing they will guide them to grant funding. They tend to lead to either a sponsored loan program or to a fee for service program. The bottom line is that pursuing grants as a means of funding start-up businesses general has a low probability of return.
There are some unbiased government sources of information related to grant funding:
WEBSITES – GOVERNMENT GRANT FUNDING
Small Business Administration: The SBA has a good introduction and description of the limited grant programs available through the Federal Government.
There are two types of grants that are available:
- Small Business Innovation Research Program (SBIR)
SBIR is a highly competitive program that encourages small business to explore their technological potential and provides the incentive to profit from its commercialization.
- Small Business Technology Transfer Program (STTR)
STTR is an important small business program that expands funding opportunities in the federal innovation research and development arena. Central to the program is expansion of the public/private sector partnership to include the joint venture opportunities for small business and the nation’s premier nonprofit research institutions.
Grants.gov is your place to FIND and APPLY for federal grants. The United States Department of Health and Human Services is the managing partner for www.grants.gov/.
There is a search tool that allows a search for Federal grants by keywords or more specific criteria. All discretionary grants offered by the 26 federal grant-making agencies can be found on Grants.gov. You do not have to register with Grants.gov to find grant opportunities.
Defense Advanced Research Projects Agency (DARPA)
DARPA issues solicitations for research grants. These are exceptionally competitive.
The DARPA Small Business Programs Office has developed a tool to help small businesses define and prioritize the most important next steps in their path towards technology transition.
DARPA considers small business concerns as a primary source of innovative solutions. It seeks to expand small business relationships and training opportunities within DOD and other federal agencies and enable the small business community to create and transition radical, game-changing technologies that benefit the Warfighter, the federal government, and the commercial marketplace.
Venture Capital is a type of private equity capital in which concept, seed, early, growth (Series A), and mezzanine funding are provided to ventures to support their growth, development, and expansion, in exchange for equity. Earlier round financing is less common and convertible debt is utilized; however, preferred equity is the typical form of investment in the later Series A rounds, which are much more common to the VC. VCs want to generate a return through a future liquidation event, such as a sale to a strategic player or an IPO.
Venture capital firms source their funds for investment from high net worth individuals through professionally managed funds, then invest the funds in return for an annual management fee and carried interest on the profits of the fund.
An individual who provides financial capital for venture investment, as well as managerial and/or technical expertise, is generally referred to as a venture capitalist. These resources are usually invested through a pooled investment vehicle such as an LLC or LP and invest primarily in highly risky but scalable seed, early and growth stage ventures. These funds are professionally managed by venture capital firms. The firms may employ managerial and technical experts with business and industry experience.
FundingSage’s Listing of VC Funds:
Several of these VC Funds are spotlighted on our FundingSage Startup Investor Spotlight. Learn more about potential VC investors there!
180 Degree Capital Group
3i US Growth Capital
Accuitive Medical Ventures
Adams Capital Management
Advanced Technology Ventures
Advantage Capital Partners
Angel Street Capital
ARCH Venture Partners
Astellas Venture Mangaement
Azure Capital Partners
Bain Capital Ventures
Ben Franklin Technology Partners
Bessemer Venture Partners
Canvas Venture Fund
Cardinal Venture Capital
Charles River Ventures
Columbus Nova Technology Partners
Draper Fisher Jurvetson
Flybridge Capital Partners
F-Prime Capital Partners
Fortress Capital Finance
General Catalyst Partners
Globespan Capital Partners
Hercules Technology Growth Capital, Inc
Highland Capital Partners
Index Venture Management Inc.
Insight Ventures Partners
Institutional Venture Partners
Kleiner, Perkins, Caufield, Byer
Lightspeed Venture Partners
Maryland Technology Development Corporation
Meritech Capital Partners
Mohr Davidow Ventures
New Enterprise Associates
Northbridge Venture Partners
Norwest Ventures Partners
Oak Investment Partners
OpenView Venture Partners
Partners Innovation Fund
Point Judith Capital
Polaris Venture Partners
Scale Venture Partners
Sevin Rosen Funds
Sigma Partners Boston
StarVest Partners, L.P.
Sutter Hill Ventures
SV Life Sciences
Technology Crossover Ventures
The D. E. Shaw Grou
Union Square Ventures
VantagePoint Venture Partners
The objectives of venture capital firms vary significantly as do their approaches. As noted above some may invest with financial goals in mind while others invest for strategic purposes. A recent phenom is the creation of firms with a societal focus. Venture capital firms may focus on startup companies in different stages of development or from different industries. Some may operate locally only while others operate regionally, nationally or globally. Some may invest only in disruptive concepts while others invest in existing established companies which simply need support to grow.
They invest in differing business models with differing growth curves, trajectories, and capital intensity. It’s very important that the entrepreneur fully understand the objectives and approach of the venture capital firm in order to utilize their time and resources as efficiently as possible.
Worldwide Venture Capital Trade Associations
African Venture Capital Association
Australian Private Equity & Venture Capital Association LTD
Austrian Private Equity and Venture Capital Organization
Belgium Venture Capital Association
Brazilian Private Equity and Venture Capital Association
British Venture Capital Association
Canadian Venture Capital & Private Equity Association
Croation Private Equity and Venture Capital Association
Danish Venture Capital and Private Equity Association
Digital Venture Capital Association
Estonian Private Equity and Venture Capital Association
European Venture Capital Association
Finnish Venture Capital Association
Greek Venture Capital Association
Hungarian Venture Capital Association
Hong Kong Venture Capital and Private Equity Association
Indian Private Equity & Venture Capital Association
Irish Venture Capital Association
Italian Private Equity and Venture Capital Association
Latin American Venture Capital Association
Latvian Private Equity and Venture Capital Association
Luxembourg Private Equity & Venture Capital Association
Malaysian Venture Capital Association
National Venture Capital Association
Netherlands Venture Capital Association
New Zealand Venture Capital Association
Norwegian Venture Capital and Private Equity Association
Philippine Venture Capital Association
Polish Private Equity and Venture Capital Association
Russian Private Equity and Venture Capital Association
Singapore Venture Capital and Private Equity Association
Slovac Venture Capital and Private Equity Association
Southern African Venture Capital and Private Equity Association
Spanish Venture Capital Association
Swedish Venture Capital Association
Swiss Private Equity and Corporate Finance Association
Taiwan Venture Capital Association
Turkish Private Equity and Venture Capital Association
Ukrainian Venture Capital and Private Equity Association
- 4 Initial Steps in Targeting Venture Capital Investment
- What Is Corporate Venture Capital? [Infographic]
- 14 Types of Information Investors May Request as Part of their Due Diligence Checklist for Your Startup