On February 22, nearly 60 industry leaders gathered at the Cove @UCI for the Angel Capital Association’s (ACA) Western Regional Angel Forum. In collaboration with Tech Coast Angels, the forum’s theme “DNA for Success” focused on where and how to invest and form strategic partnerships. The event featured speakers from several angel groups and venture capitalists from across the western region.
“Angel [investors] are absolutely critical to incubators,” said Rory Moore, founder and CEO of EvoNexus, a leading OC incubator. “More companies are coming to us with the cash already in hand, they’re just looking for connections.”
The morning presentations emphasized the crucial role key partners play during all stages of an investing cycle, including collaboration, best practices and pitfalls.
“At Edwards Lifesciences, we invest 95 percent on two parts, which is based around a seven-year plan and [dependent on] if the company fits on our map,” said Stanton Rowe, corporate vice president, advanced technology and chief scientific officer, Edwards Lifesciences. “We consider if they are a strategic fit, and what we are buying—the technology or the company.”
Rowe encourages Angels and start-ups to be transparent about their risks and discourages “perfect plans.”
“Do your due diligence on investor relations,” said Rowe. “We encourage incubators and accelerators to show us deals. Don’t build perfection in your plan and understand the risks.”
During the late morning sessions, three lead angels with various investment models from the western region shared their experiences, insights and core values on community collaboration to get deals done via various investment approaches and successful techniques.
“We learned early on the key to syndication is networking and relationship building,” said Kevin Morningstar of Rockies Venture Club, a nonprofit whose mission is to educate entrepreneurs and investors.
Despite Colorado’s exceptional deal flow, Morningstar explained there is not enough capital to exploit these opportunities. He characterized investing success as part of a three-legged stool.
“You need to have good deal flow, capital capacity and also a good supply of expertise,” said Morningstar. “As tempting as it is, you can’t really get too far out in front of any one of those three lanes. In order to attract more capital, our deal flow has to get better and larger.”
He explained the Rockies Venture Club’s favorite entrepreneurs are the ones that have successfully grown and sold companies before.
“The lesson I’ve learned over the last three years is not so much on how to raise money and who to approach, but how to determine whether a deal is investible in the first place either with a cash investment or investing the next chapter of one’s life,” said Morningstar.
During the program’s “Fireside Chat” segment, Jeff Kearl, co-founder, CEO and chairman of Stance, a lifestyle apparel brand best known for original sock and underwear designs, and moderator Richard Sudek, UCI Applied Innovation’s chief innovation officer and executive director, discussed Kearl’s VC experience in addition to his avant-garde approach to evaluating and investing in start-ups.
“It’s the people,” said Kearn. “Ask yourself what it’s going to feel like working with this person during hard times. Consider the market dynamics—how big is the market and how fast is it growing?”
Kearn, whose company received over $100 million from Silicon Valley VCs, encouraged better understanding of a startup’s capital model and management.
Later in the afternoon, a panel discussed new market opportunities, or investing ahead of the curve. The panel of four discussed the best technological investment opportunities, which include artificial intelligence (AI) and augmented/virtual reality (AR/VR). The greater question was posed—should we jump on the AI bandwagon?
“Anything that has a lot of data, AI works great,” said Kurt Busch, CEO of Syntiant. “Ask where you are getting with a lot of data. Healthcare diagnostics or anything with pattern matching means a lot of development in the chip space.”
There was a collective emphasis placed on computer chip space as the most emerging technology with regards to big data and AI.
“I believe this is an opportunity for Angel investors to invest in chip companies,” said Busch. “If you’re going to invest, invest in chips.”
Raghu Bala, CEO, Netobjex, explained the Internet of Things (IoT) market has tempted investors, but to consider that the market itself is a lot of smaller collective markets and to look at the greater picture–chip companies benefit from this as an emerging market.
“It’s exciting to have these data points and it will allow us to do a lot more things,” said Bala. “How do you add the context to make all of that data meaningful?”
The full-day event concluded with more detailed discussions and networking sessions at the Cove @ UCI.
For more information about events at the Cove @ UCI, click here.