Boise Angel Alliance Seeks New Members

Published in the Idaho Statesman Business Insider, August 20, 2014

The Boise Angel Alliance (www.boiseangelalliance.com) is ten years old.  It was formed under the leadership of Mary Andrews, who at the time was working with the Idaho Department of Commerce after positions in private equity and venture capital.  Mary had a vision that local people could come together to provide capital to local entrepreneurs. She is now the Director of Economic Development for Boise State, and was just elected president of the Boise Angel Alliance for the second time after an eight-year hiatus.

Today more than 100 individuals belong to the Alliance; nineteen local companies have received more than $2 million in equity capital, and those companies employee more than 400 people in the Treasure Valley. 

Angels invest first of all to help the local economy, but returns are important also.  Here the record is not complete.  We ultimately have to sell our investments to know our returns.  We continue to hold positions in seventeen of the nineteen companies.  One was sold for a substantial profit; one went bankrupt and we lost our entire investment.  It will be another five years or so before we can really begin to assess our investment returns.

We know this, however.  Entrepreneurs continue to need capital.  Members of the Alliance just finished raising capital for our third angel fund.  Known as the Capitol City Angel Fund, it now has approximately $1 million of fresh capital available to invest in local start-ups. 

Our process is thorough and takes time.  We are appropriate for only a small portion of startups in the Treasure Valley.  Information our criteria and application process is on the Alliance web site under the tab Entrepreneur. 

Most successful applicants will work with one of the many service providers in the valley to prepare their applications and their pitches.  We recently provided training to local resource providers in our process and criteria.  A list of trained resource providers is listed under the tab Resources.  We strongly recommend entrepreneurs seeking capital from us consult with one or more of these trained service providers. 

In addition to making capital available to the entrepreneurial community, the Alliance works to enable local individuals who have the financial capacity to invest to do so using best practices.  We generally meet monthly to listen to investment pitches.  We have three standing committees that do initial deal screening, consider follow-on investments in companies where we have already made an investment, and to review deals proposed by other angel groups in the northwest.  When we are considering an investment, we form a due diligence team to look into the entrepreneur and the company, and to report back to the entire group.

The Alliance invites people interested in learning angel investment practices to apply to join us.  The Membership fee is $500 per year.  Members are invited to attend all general and committee meetings, and to participate in our education program. 

Information on membership is available from the web site under the tab Investors.

Seek Help from Boise Service Providers before Applying to the Boise Angel Alliance

The Boise Angel Alliance (BAA) is ten years old.  During those years the BAA formed three angel funds with total capital of nearly $4 million.  To date, these funds have invested $2.1 million in the stock of nineteen Treasure Valley companies.  As of June 30,  these companies have created more than 300 jobs since we invested in them.

During this ten-year period we have been active in mentoring local entrepreneurs prior to their applying for funding with us.  But, under the leadership of our new president, Mary Andrews, we have recently announced a shift in our strategy.  We will no longer mentor entrepreneurs before they apply to us.  Here’s why.

1.  The Treasure Valley has lots of support for entrepreneurs.  There are many entrepreneurial service providers available to help entrepreneurs including SCORE, the Idaho Small Business Development Center, the Women’s’ Business Center, Zion’s Bank Business Center, the Tech Connect, Startup Grind, and Activate Boise.  We don’t need to offer mentoring services any longer because there are others focused on providing this service.

2. Our mission is to help angels.  We know there are lots of people in the valley who have the financial capability to make investments in early-stage private companies.  But most don’t do so.  We want to help these people learn how to make these types of investments using current best practices. We do this by organizing angel funds and through our education program.   To the extent we spend our time mentoring entrepreneurs, we have less time to help our existing and prospective angels.

3. Mentoring by investors can be problematic.  Sometimes our angels work with pre-funding entrepreneurs, only to later turn them down when they apply for funding.  Naturally this can confuse the entrepreneurs and not infrequently causes anger. 

The BAA is modifying its business processes to match this change in strategy.  Here’s how the new model will work.

1.  Train those organizations that support entrepreneurs.  On July 31 we are holding a training session for service providers that are interested in assisting entrepreneurs who may seek funding from local angels including our funds.  If you are a service provider and would like to attend, please let the BAA know by sending an email to looncreekcapital@looncreekcapital.com.

2. Refer entrepreneurs to the service providers.  Our web site will be changed to encourage potential applicants to first seek the counsel of one of the local service providers.  Of course, entrepreneurs may apply directly to us without seeking such counsel, but our experience is many who do so file not well thought-through applications and rarely receive funding.

3. Encourage service providers to serve as an advocate for the entrepreneurs.  If a service provider is working with an applicant for funding, the service provider will be invited to attend our screening meetings with the entrepreneur.  In this manner, the service provider will serve as another set of eyes and ears for the entrepreneur as we engage with them.

Interested service providers and entrepreneurs can learn more about the process from our web site:  www.boiseangelalliance.com

Disclosure: I am past-president of the Boise Angel Alliance, a principle in Loon Creek Capital that provides administrative services to the Boise Angel Alliance and its funds, and am an investor in all three angel funds.

Mainstreet Businesses -- Kelli Soll and Global Service Partnerships

I have been remiss in keeping my blog up to date. This blog re-posts articles I write for the Business Insider at the Idaho Statesman.

Here's the May, 2014 article about Venture College entrepreneur Kelli Soll, and her business Global Service Partnerships

Not everyone wants to start and build a business with investors, high growth and an exit. Some prefer to simply work for themselves.  We call these businesses Main Street or Lifestyle businesses.  Lean startup principles apply to starting a Main Street business as well as to scalable businesses attractive to angel investors.

Venture College entrepreneur Kelli Soll, a partner in Global Service Partnerships (GSP) is an example of the application of lean startup principles to a Main Street business. Kelli and her partner had a vision that they could somehow create a business in Idaho that would deliver value to people here and at the same time attack a literacy problem in Belize.  They wanted to create a profit making social venture that would enable them to earn a living while impacting this social problem in Belize.  How do you do that?

They began by proposing service learning trips to high school students.  Kelli interviewed 90 high school students and educators.  She learned they would love to go to Belize, but there was a problem.  High school students don’t have the money to go. So she had to pivot.  That is she had to find a customer for whom such a trip would provide value and who could and would pay.

She spent 50 hours talking with parents. She learned they might be willing to pay to send their children to Belize, but only if she could assure the parents their children would be safe.  Pivot number two.  She needed to redefine her relationship with her customers. This wasn’t just a commercial transaction; she needed to develop a very personal relationship with her customers to gain their confidence.

Armed with this information, Kelli developed a “minimum viable product” or an MVP.  An MVP has just enough features to see if the customer will in fact pay.  She spent $20 to print brochures.  Note, this was her first cash investment.  She invited those she had previously interviewed to meetings where she gave them her flyer that said she would be taking people to Belize in March 2014 and the fee would be $3000.  Fifteen grandparents, parents, senior citizens and four teenagers signed up to go.  Wow! That was $45,000 of presold revenue.  Kelli’s total investment to date, other than her time, had been $20.

Based upon this assurance that she had paying customers, Kelli then (and only then) went to Belize to set up the partners and activities such a trip requires.  The end of the story is the trip happened, Belizean children’s lives were changed, and fifteen Americans had an amazing experience.  Kelli has now presold two more trips.  That will result in a total of $135,000 of revenue in her six months of operations.  You can learn more about GSP at www.globalservicepartners.org.

The lesson is that she did not first make a significant investment and build a product.  She talked with potential customers and kept talking and changing her plan until she nailed down the customer segment, the value she would create, and a revenue stream.  Only then did she begin spending money on her product—the opposite of most entrepreneurs. 

Update on Boise Angel Alliance

I have been remiss in keeping my blog up to date. This blog re-posts articles I write for the Business Insider at the Idaho Statesman.

Here's the March, 2014 article titled update on Boise Angel Alliance:

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Update on Boise Angel Alliance Investments

The Boise Angel Alliance (www.boiseangelalliance.com) is ten years old.  Mary Andrews, who at the time was with the Idaho Department of Commerce, Phil Reed of Highway 12, Steve Simpson, retired CEO of Extended Systems, and Phil Bradley, who was CFO of ProClarity, thought the time was right to organize those in the valley who were in a position to invest in early stage ventures.

The Alliance has two purposes.  One is to enable local people who can afford to invest in early stage companies to do so using best practices. As new investors join, those who have experience share what they have learned.  Some of our members attend regional and national angel meetings, bringing back practices from money center angels.   The second purpose is to make capital available to our entrepreneurs.

In the early years only a handful of investors showed up at the meetings, and frankly not much money got invested.  But thanks to the vision of the founders, today more than 100 investors are actively engaged with the Alliance. 

Here’s what has been accomplished (data are for April, 2007 through December, 2013).

Total invested in the Treasure Valley:   $1.7 million

Number of Treasure Valley companies funded: 15

Jobs created since investment: 220

We also invested about $250,000 outside the Treasure Valley along side other angel groups in five deals.

It’s a lot of work to invest thoughtfully.  In the seven years we have actively been accepting applications, we have reviewed 363 investment inquiries.  Of these 85 received serious consideration.  Of those receiving consideration, we invested in about 25% of them.

The number of angel appropriate deals in the Treasure Valley is increasing.  We invested $650,000 in 2013 in five deals or about 30% of our investments in the last seven years were made in 2013. We’ve already closed one investment in 2014.

Here are the companies in which we have invested:

Treasure Valley companies:

Baseline

Conex

Core Concepts

CradlePoint

DB3 Mobile – Meal Ticket

Fit Wrapz

Gogo Labs

Health Fundr (2014 investment)

IdeaRoom Technology

Inovus

Loan Tek

Nurture - Happy Family (sold 2013)

Paksense

Prosperity Organic Foods

Social Good Network

Voxbright

I am happy to report that every one of the above companies is still in business. 

We obviously don’t make many investments.  Our processes and expectations are stringent.  However, we hope that all companies that come in touch with the Alliance gain value, regardless of whether or not we invest.  We have a mentoring committee that advises companies regarding their strategies.  We have partnered with the Idaho Small Business Development Center and the BSU TECenter to coach entrepreneurs seeking funding on their pitches.  Our committees try to give feedback whenever they meet with an entrepreneur. 

If you are an accredited investor interested in participating with us, or an entrepreneur seeking funding, additional information is available the web site.