By guest authors Irina Patterson and Candice Arnold
Irina: What is your geographical focus?
Tim: The state of Florida. As stipulated in our fund document, we are not allowed to invest in companies outside the state of Florida.
Irina: Can entrepreneurs pitch you directly, or do they have to get a referral from someone in your angel group?
Tim: They can submit their business plans to us without a referral. We take all of our business plans through our website: www.tamiamiangels.com
We use Angelsoft [online management platform] extensively as our website and our back-end deal flow management tool.
In fact, according to our policy at the fund, I’m not allowed to talk to an entrepreneur until he or she submits a plan on the website.
That does a couple of good things. It forces discipline, so that we record everything that comes in automatically, as long as we adhere to that policy of taking everything through the Internet. Also, it provides good transparency to our members so that conflicts don’t develop.
You could get in a situation where there’s a certain segment of business plans that may be mailed to you and a certain segment that go through the Internet. If you’ve got multiple channels like that, some members of the fund might think there are business plans that are being held back or that they don’t have full visibility on every deal that comes in. We eliminated that concern right from the start by requiring that each deal must go through our website. Then we open up our deal flow management system to all of our investors, so they track everything that’s going on through Angelsoft.
Irina: Approximately how many deals do you receive a month?
Tim: We receive, on average, between 20 and 40 deals a month.
Again, remember that even though we’re a new fund, we did have a bit of tailwind to the establishment of the angel fund because we had previously been operating as the Gulf Coast Venture Forum. The Gulf Coast Venture Forum was founded in 2001, so it’s celebrating its tenth year. That organization is still operational.
In southwest Florida, we’re trying to build our entrepreneurial ecosystem. We’re fortunate to have two angel organizations in southwest Florida.
One is the Tamiami Angel Fund, which is an angel fund, an investment structure, with committed capital. The second organization is the Gulf Coast Venture Forum, which is an angel investment network. They do differ. I don’t know if anybody’s gone into the difference between a fund and a network, but I could do that for you.
An angel investment network typically charges membership dues. The organization is closed to the public; that is, it’s only open to accredited investors. [At the Gulf Coast Venture Forum], we have membership qualifications and make each of our members pay annual dues and certify that they are an accredited investor, according the U.S. Securities and Exchange Commission’s (SEC) definition of an accredited investor.
Then we solicit deal flow. We select the best companies from that deal flow, hold our monthly meetings, allow the entrepreneurs to present, and then the Gulf Coast Venture Forum is pretty much done with its duties. Whether an entrepreneur gets investment at the Gulf Coast Venture Forum is really up to the entrepreneur and the angel talking with each other, developing a relationship, and holding whatever meetings they need to in order to progress toward an investment in the company.
The Gulf Coast Venture Forum is not a broker-dealer, it is not a matchmaking service, and it does not collect a sales commission. It’s just a not-for-profit organization that brings forth the best deal flow and puts that deal flow in front of our members, who are accredited investors.
Now, on the fund side of it, you’ve got a closed group of individuals who have already committed capital up front. We go through a similar process where we attract deal flow, select that deal flow, allow them to present. At that point the differences between the two organizations start to show.