July 27, 2020

Angel Capital Association, what is it, how does it work and how to use it - by Juliana Garaizar.

Angel Capital Association, what is it, how does it work and how to use it - by  Juliana Garaizar.

Juliana Garaizar, the board member at Angel Capital Association, member of Portfolia, President of Business Angel Minority Association and Launch Director at Greentown Labs in this episode of Fundraising Radio explains about work of ACA and how can entrepreneurs benefit from it. We also talk about other organisations that Juliana is a part of and speak about the ways founders can work with those associations.

Angel Capital Association: https://www.angelcapitalassociation.org/

Portfolia: https://www.portfolia.co/

Our Blog: https://www.fundraisingradio.com/blog/

 


Transcript

this is fundraising radio and today's guest speaker

We'll have Juliana riser lounge director at Green town Labs, president and business angel, minority Association, member ad portfolio, and also the board member of angel capital association. 

So, 

Julia has a ton of roles, 

and we'll talk about most of them in this episode, 

and we'll mainly focus on angel capital association because you might have heard my previous angel investor speakers referring to as a great source of information on angel investing. 

So, you come up with that, let's start with angel capital association for Atlanta and with your background. Sure. Thank you. Consenting for having me. So, as you mentioned. 

Yep, the sound just disappeared again.
I heard you started talking and then just gone. 

If you hear me, can you try dialing in with the phone? Sometimes that helps the sound. It's really weird. Can you try to reconnecting from a phone? 

I hello I know this sounds like that the,
I,
so is something is really weird. Like, 

the sound sounds very, not corrupt,
but no,
it's, 

I'll show you the record afterwards so this, you understand what I'm talking about, but for now,
can you try connecting from the phone? Okay sounds good. 
I'll continue and just go altogether. 
Yeah, yeah, you can. Sorry. So I'll just pretend that I did the whole introduction. The question. Okay and then you just take it out from here. Sounds good. 

The Capital Association is the North American trade association for angel investors, angel investor groups, and also early stage funds and investing platforms, such as angel East or funder club. 

So it's not only for the US is for Mexico and Canada and together. 

We have around seventeen thousand different Angel, digital angels so it's it's really powerful and they dedicate themselves to first make sure that angel investing becomes and asset. Plus. 

So a lot of it has to do with education and also lobbying at government level. 

The second thing they do is syndication, so we put together a lot of monthly syndication calls for groups of angel investing that are interested in specific sectors. 

So there's a left sided syndication call, a clean tech and energy syndication call and impact investing call, and also a women founders call. 

And lately, we're gonna do one that is also an international syndication call that I will be running and last, but not least everything regarding data. 

Analytics, so it's very important for us to have a members availability in terms of what the latest statistics regarding angel investing are, because we're growing a lot as a new asset class. 

So we put together a different report for that such as the American angels statistics. There's also a few reports on exit numbers, and now we're gonna do specific reporting on how investment has to related to corporate nineteen. 

That's really that's really great. I would actually love to see that report working. I find all those reports. 

So, the ancient capital association as a website, angel capitalists, association dot Org and there's a data. That's a call. The member resources and then so, if you are a member, you can access those. 

But then there's also quite a lot of resources. That are publicly available. So, if you go into resources, you'll see both for members and non members and there's plenty of statistics. 

Some of them as I mentioned for the ones of Cobain, we're still gathering the data. So,
we will be actually showing showcasing the results of our study for coffee,
at nineteen, 

our full summits for the ACA that is gonna be around October. 

We, we still need to finalize the date. But I think is gonna be around end of October, and he's gonna be call investing in a new world. 

Nice and that sounds pretty accurate. Actually nice naming, 

but just to make sure that I understand correctly agile Capital Association is a big include that visual clues up all the agile groups together, 
and just helps them, 
you know, 

helps gathering data to educate all the angels. 

Et cetera is it? Yeah, so I think data is one of the things education is and all the one that is very important. 

You know, there's a lot of angels who do this more as an arts instead of a science. 

So, we want to make sure that we provide framework so that they can do angel investing, more efficiently and with better results. So, we're really trying to professionalize angel investing. 

And I think since we've been an association at the beginning, everything was doing it in on on the side with the informal groups, created and scenes. 

So we became an association with make sure that many of the angel groups. That were formed around the US and Mexico. 

And North and Canada, we're also having a structure on how to run it more professionally and of the standards for governance and syndication with other groups. 

So, I think that's been pretty, pretty important for for us. And in terms of syndication. 

We had a lot of our member groups that have started syndicating and we've put together rounds of up to ten million. So in many cases we have even bypassed the need for VC funding and in some of the deals. So nice. 

That's actually great. That's really impressive. Numbers, so, let's talk about your role at angel capital association as a board member. What? What did you there. 

Yeah, so one of the reasons I was asked to be a board member is because I was very involved in the event planning. So the ca has several events a year. 

One of the biggest one is their summit that normally happens around me. So these here was the first one we had to become virtual, but it was supposed to happening Colorado next year, it's supposed to happening Portland. 

But again, that's not enrollment possible with coffee. Nineteen. We know already that we could make it virtually. 

Because the summit was a success, and as I mentioned before, there's a second full event, the full summit. 

That is also very, very important for angels and in this case is going to happen virtually around October. So, those are the two. What? We would call national summits and then there's also regional summer summit. 

So, you know, them Northeast region, house, regional event. 

There's also a regional event for California there's a regional event for Texas, and the angel capital association is always overlooking and organizing that. So I've been part of many of their organizing committees. 

I'm the vice chair for their full summit. And also, one of the things I've been very involved in is the membership and marketing task force that they have for the angel capital also see. 
And so making sure that we have more diverse membership. So not only in terms of women,
but also,
in terms of minorities, 

and in terms of more international members, 

and also to make sure that, 

you know, 

we have more international groups that can come to us to make sure that they get the latest in terms of best practices a lot of international groups up there are looking at the ca and the US 

investors for really the latest trends and they're very interested in seeing what we do. 

So I'm one of the connectors to make that happen. So those are those are my roles within the ACA board. That's really sorry for losing their voice. That's really interesting. I'm curious what's going on in those. 

Not but conferences, so, 

is it primarily for angel investors or can actual founders attend as well and maybe learn something about how to attract angel investing and Joe money, 

or find some useful connections there so, who is it actually meet for? 

So consenting? You can make a very good point, because I feel that a lot of angel investors come from the entrepreneurial world. So, you know, there's a very fine line between entrepreneurs and angels and for many entrepreneurs. 

I think it's very good to also come to these events to understand what happens in the angel. Mine so that they can better frame their pictures and make sure they get the best. 

But also, 

in many cases, 

a lot of the entrepreneurs who came to these events to pitch, 

suddenly at some point, 

they become angels and they really think that the ACA is a great network to be a part of not only because some of them belong to angel groups that are already part of the ca, 

but the ACA is also very good for all the parts of the US and Mexico and Canada where maybe there's not enough density in terms of creating an angel group but you can still be an individual member and 
still get a lot in terms of deal flow that maybe you might not be able to access if you were with a 
group in your own region, 
or, 

you know, 

tips on how to start creating your own angel group. 

So for entrepreneurs, in the case of the big Summit, that happens, you may their specific part of the summit called innovation showcase entrepreneurs can actually pitch. 

So, in the case, when the event was not virtual, it was a big call where the companies would actually exhibit their products. 

They will also have the opportunity to do a two minute pitch to the bigger audience in a planner recession and then doing all of the networking breaks. 

All the audience will go to the showcase where the breakfast would happen the happy hours. And they would be able to mingle and have one on one conversations with the companies. 

And also, at the end of the somebody that will be an award ceremony where the companies would have three different awards. One would be the most investable company. 

The other one would be the best feature presentation and the third one would be a price that we call venture bucks and basically, at the beginning of the event, we would have every angel with a money. 

And then they can give those venture box two different companies. 

And the ones who would gather the most bucks would have the ventral booked and let me tell you, those prices are very, very important for those companies because they give a lot of notoriety and visibility. 

And the ones that got the price last year were able to fundraise around one point, 

seven million, 

at least a company that I brought in from from my side, 

they got a lot of exposure and a lot of interest and they were able to pitch at least to six or seven different angel groups from the ACA. 

That's really that's really great. I mean, six central groups that might sound not as cool as. 

As it is in reality six angel groups that's really impressive. So nice work there. I'm wondering, by the way are the are there any lot still open for entrepreneurs to role to enroll or is it already filled up? 

So that happening me. Okay. And one of the things we, because he was really, really successful and, you know, that's something the innovation showcase has started around five years ago at the beginning. 

The Sundays were only for angels and dedicated to education for angels and latest trends and syndication. And then I remember said, like, hey, you know. 

We love investing so why don't we throw in some companies there? And that's how the hauling innovation showcase started our first. It was only for the summit and now, because there was a lot of success we're thinking about incorporating also to the full summit. 
So, it's to be discussed what we can do there was also an investors of color showcase. 
That happened right before the past AC summit that was very, very successful, and led also to quite a few investments. 

We we had together and special purpose vehicle together, investing some of the innovation showcase companies for founders of color. 

So I think we might have another one, or, at least another pitch even a couple before or after the full summit. We're still figuring out which one it will be maybe something related to cubic nineteen. 

I think we will repeat again, 

the founders of color one, 

because it was very well attended and we're still figured out, 

but I think there's a lot of interest and a lot of synergies for making sure that once the investors are congregating, 

such an event is also a space for,
for pitching for entrepreneurs that's really great. 

And what should companies try to roll in those showcases should be like, Pre revenue, or shouldn't be post revenue already and Pre product or product. 

So, in general, the companies that have come to a showcase, need to talk to the director of partnerships. So they need to try to contact the ca to have a discussion with them. 

Because they are the ones putting together the innovation showcase. It really helps when there's an angel group that has already invested in them and is kind of championing them. 

So, that's when they get the most traction, because it's like, okay, you know, we come from California, South Coast angels has already invested in us or the current two forum has already put some money in. 

So, you know, when that's the case, I have to say that, in general terms angel investors bottleneck is not about money. It's more about time, you know, in general angel investors do this on the side. 

So they have many other things. And in general, we don't have time to perform a fully fledged. 

Due diligence, 

so when a deal has been vetted and has been the due diligence has been led by some other person, 

and some other group, 

that has some kind of credibility notoriety things can go really, 

really fast and because they can share the due diligence documents. 

The deal room, and that has been one of the most fricken forms of having companies into the innovation showcase, because they were already sponsored or championed by someone. 

But we still got companies in the innovation showcase who came without a sponsor and stuff like, hey, you know, we, we want to be able to pitch. But for that, there was a fee involved and for all of 
them. 
But the fee in general was low enough to make it very, very attractive to many of the companies. That's great. That's great. 

And, congrats, on the success of those events, hopefully, the current virus will be over somewhat soon, and we'll be able to do those in person again, but for now, let's move on and talk about portfolio a little bit. 

So, I think I interviewed to people from portfolio actually more than that. So I had several people from portfolio, but I wanted to hear your thoughts on this. What does portfolio. 

So, portfolio is actually a platform of funds that are trying to not only get a great return. 

We are in the top twenty five percent total in terms of transfer our funds, but also they try to activate more investor. 

We're talking about more, we many investors and more diverse investors so the way they do it is by basically doing a learn by investing. So, our funds are sort of mixed between what a normal VC fund would do. 

That means that you invest the money, and you hope for a return, but also be a hybrid between also an angel network because our or limited partner investors are very engaging what we do. 

So, we have mostly pitch calls where we have companies, pitching to remotely to all of us and then, once they pitch, we have our limited partners, voting or whether they want to continue with due diligence with those companies. 

That have to switch. And then when they do if they want to get involved in. 

Involved in due diligence so you have a five lease for funds that are running the due diligence and the final decision, 

but, 

you know, 

you can get as involved as possible because we have a huge network of investors who are very, 

very knowledgeable in many different areas. 

So it's always great to have their inputs for due diligence and many of them get so involved that actually they become leads for subsequent funds, not only for portfolio funds. 

But, in some cases, they decide to go ahead after they feel comfortable enough to create their own fund. So they to open the new angel networks or or just start investing on their own. 

So, in our case, I think there's a third element of being a movement for women and diverse investors to activate them and to feel that they have a community where they feel empowered. 

Because, in many cases, women and the investors don't invest not because they don't have the money, but just because they don't have the network and they don't feel empowered enough. They feel that they don't belong. 

So, our portfolio groups are a safe place where they can feel that they get the tools, but also the empowerment they need to to start investing on their own. 
That's really nice. That's great. And good job. There. I love what portfolio is doing. The. There is a good reason for why. I interviewed so many portfolio members. So, Pre, Pre, happy where you guys are headed. 

But let's move on to another Association. That you're working on, which is business angel my Nori Association. What is that? 

So the business Asian minority association came a little bit, because,
you know,
of my work at different angel groups around the world, 

I realized, 

that, 

you know, 

activating women in to investing was not enough that we needed to have more diversity into investing. 

So, put together the race, the community, and, you know, we thought that Houston would be the perfect place to start this network. 

Because Houston is the most diverse city in the US and we wanted to really see the diversity Houston translated to the investor community. 

And I have been doing a lot of studies about bridging the gender gap and realize that, you know, only by incorporating more diverse investors, you can investing more diverse deals. 

So when you have more women investing, they tend to invest. 

More women led businesses than men to do. The same thing happens for more diverse investors they tend to look more carefully and more closely at deals that are led by minorities and that's how we tried to bridge the race and the gender gap. 

And so we started bam,
the business angel minority association in Houston, 

but there's already a strong in community in Boston that most probably would be the next chapter in Miami to there's there's a lot of Latino community there that's interested in 

making making it happen. 

And most, probably in Silicon Valley, so at the end of the day, I think we want to become a sort of ACA for minorities, where we'll not only be able to provide the best practices and education. 

But at some point, we're also trying to put together a fund. 

Because one of the things that we've seen happening is that many of our members are totally new to investing, which was our key objective to bring more newer and more diverse investors when we did. 
We decided that they were still a little shy in terms of pulling the trigger and investing and they would 
feel more comfortable by investing in a fund that is led by professionals and they can diversify without having to put that much money in. 

So now we are considering the fund for for we're working on it, and pretty soon we will be announcing it and hopefully getting a lot of the investors in. That's awesome. Congratulations on that. 

And hopefully, that will be a successful fund. So, best of luck to you there, but let's move on to the question that as pretty much every investor of mind that's pretty steal on fundraising radio and it's about the pitch deck. 

So I bet you see tons and tons of pitch deck. So, what do you think are the three must have points on that pitch deck? 

So, the first must have, I mean, should be pretty obvious, but I think that, in many cases, you know, I still feel that it's missing there. 

And I don't know if it's because, you know, we with demo days, you have, like, a sort of cookie cutter of putting together a page where you start with the pain and the market. And then you get to the solution that normally is your company and your product. 

But I feel that, in many cases, when you start a page, you don't realize til at least the second or third slide. And, I mean, maybe two minutes in what the company really does you know, you understand the pain. 

And in, in general, they do take too much time talking about the pain because in many cases, the pain is pretty obvious. And sometimes, like, okay, they're talking about the pain about the potential market. 

And you still don't know what the company does is like, is it a product? Is it a platform? Is it a software? What does the company do and when you your mind wanders. 

So, for so long, you tend to totally deviate from the whole thing and start getting into your own thoughts and you lose, but pretty big chunk of the audience. We don't tell right off the bat. 

What your company does and it should be like, you know, we are a software platform. Assess B, to B service. We are a consumer or we are a product. That does that. And then you can get into the pain. 

But if I still have seen quite a lot of features that I don't understand what the company or the product is, which is kind of. Right so, I think that would be one of the of the key elements. 

The second element that I think is missing in many many pitches is actually the business model. You can talk a lot about. 

The product, but then pretty important is how you're going to get money out of it is you're going to produce it. Are you gonna sell it directed to the customers? I'm going to license it. What is your cost structure? 

What is customer acquisition cost cost of goods sold margins all these things that are really the nitty gritty of what the investors want to see investors want to see numbers and wants to see how we're gonna make money. 

And a lot of the founders, according to the science of it, you know, the tech involved, because they're really in love with it. But for the investor, what really matters was, they kind of get to know okay. 

The the science makes sense, and maybe I can dig further up into that or have someone who's a techie or scientist help me deal with that situation. 
But what really matters to them is how you're gonna make money out of it, which comes to my third, 
very important part of the page. That's in many occasions is also missing, which is the exit strategy and I know that many investors would tell me. Oh, you know, we're so early that we don't know. 

And and it's fine when you don't know, but at least you need to try to figure it out what the exit is going to be. And that's something that is not very, very, you know, in many cases that is a great, great. 

So, those are valid points. I'm not sure if I completely agree with you on the first one. 

I mean, it's a common problem that you just see on the page that, I mean, on the patient you're like, okay, I still do not know what they're doing anymore, but, you know, took like, ten seconds to explain what their product is. And you're like, okay. I already forgot that. 

Can you please go back to the issue? So, yeah, I agree with you on that still is just requires a lot of polishing. So, take your time. Good presentation. 

Plenty, and, you know, one of the points I wanted to make sure we got that this is an iteration. So the more you present, the more feedback you will get, and the more you will get to your pitch. Absolutely, absolutely. 

And it requires tons and tons of time. So do not expect to finish in a couple of days and not have to be that. 

This, the, the deck is not only for for the investors, but also for, you could be like a driving script for your company. 

And you should be able to change it constantly every time you get new feedback, or but it's a living document that that should be considered not only for fundraising rate. Right? 

It's a simple version of the business plan, but speaking of pitching. 

Let's talk about foundries for trying to raise money right now during this condemning. What's your recommendation to the to them? So, most of my listeners are early stage founders so precedes life seed rounds. What's recommendation to them? What do they need to do to raise money? Right? 

Now, if they just can wait for more time to to see that does Sally. So,
I think first of all,
they need to understand that, 

you know,
people are still investing,
you know,
there's some investors who are saying that they are in crisis mode, trying to figure out what their own portfolio companies are doing, and try to make sure that they they help them survive,
but,
you know, 
if if the deal is good enough, 
and the trend is there, 

there's gonna be enough interest. 

So, you know, I think they need to be the right attitude that whenever a deal. 

It's good and the opportunity is there, there's, there's gonna be money, so a pessimistic attitude doesn't help, you know, so that's one. 

And then, 

I think, 

you know, 

you have to be very creative, 

because there's quite a lot of people who might not have thought about early stage investing another realizing that the stock exchange is no longer an option, 

or that they don't want into real estate.
And suddenly, technology is so one thing that innovation is never, it's not going anywhere. 

So I think a lot of people don't realize that there's a lot of people around that, I mean, their own networks that might be accredited investors, but they've never invested before. 

So, if that's the case, you know, this could be someone you can convert into angel investing and I've seen that happen quite a lot in Houston where, you know, angel investors are not a given in Silicon Valley. 

You know, there's plenty of people who can invest, but, you know, they won't do it because they, they've never done it before us. 

So, they feel like, you know, they don't have a support platform or something, you know so, if that's the case, you know, first of all, you know, try to get them introduced to angel investing and, you know, to the possibility of investing in your company. 

And if that's not enough, we did quite a lot with the Houston angel network, and even with the angel capital association whereas so, like. 

Refer them to that can help them invest your company. So, like, well, if you don't know how to do if you don't know how. 

The trims even need a season investor to help you. 

Figured out how, you know, they still should be structured and what are the key questions you would need. 

Then that's why you have portfolio,
or you have other networks out there to help you figure it out and and, you know, 
not only you get investors that know your company and are passionate about your company because they know you are ready but also you get new investors in, 

instead of going through, 

like, 

the typical path I think entrepreneurs are about being creative and getting out of the beaten path. 

And I think that's one of the things that has worked for a lot of Houston companies that were very creative in terms of looking for their angels. That's true. That's true. 

I mean, being crave during the fundraising process is extremely important and people to not really think about this process is, you know, something that might be fun and creative. 

So, we consider that please, but here, we're moving onto the last question of today's episode, which is a call to action. So, what's the one thing that you would like the listener to? As soon as the episode is over. 

So, I think, you know, I've seen a lot of angels that are eager to to mentoring and office hours, and that are very involved in the community. 

So, the call to action would be, like, try to network with them, you know, and established what could be the beginning of a relationship. 

And I have to say that in many angels, and investors are liter tired of the cold page, where they receive thousands of emails regarding, you know, different businesses and different page decks. 

And I think you need to be creative in terms of connecting with them. So, if you dig a little bit about them and something that might be of bio, like, for example, what their engagement are. 

Community engagements, non,
profits,
holidays, 

sports, 

anything that might you might be connected with somehow because your daughter goes to this school, 

or is trying to get to this university. 

Something that might not be totally business related. That's refreshing. Right. Refreshing for angels. That's right. I think at the end of the day angels up. 

Not only because it's a good deal, but because there's chemistry with the entrepreneur, there's a certain rapport there's a certain identification they feel identify with them and that only can happen for personal relationships. 

So, instead of just going full force to the pitch, you know, even if you're not fundraising, I would say, start networking. 
There's,
there's a lot of online events now where there's a lot of investors calming for demo days, virtual demo days,
virtual deal rooms where there's a people there's a lot of people involved virtual networking, happy hours all these places trying to figure out where these,
these people go and and try to have a personal relationship first that maybe at some point, we'll help you develop the fundraising relationship you need. 

Exactly. And you have to do events, like six months before you even started fundraising to make sure that that actually develops so great advice. And for me, personally, I would recommend you checking out our official blog. 

There is just one article, and it's on Andrew, investing from the president of tech, San Diego. So, check it out. We'll wrap it up here. We'll wrap it up here. Thanks Juliana for coming up. 

And for sure your knowledge about so many different organizations, I think that was really the app is in a lot in this one. So thank you for that and have a great day. 

Have a good day Thank you for having. I mean.