Since others have started the practice of giving out first names of active high-tech angels in Atlanta, I thought I’d name my five. These are "striving" angels you don’t see on the tech scene, but they can be relevant prospects to fund your deal:
1) Ferd – Has worked 30 years for a large corporation, no major domestic disturbances during his life to drain his wallet, more than adequate 401(k), stable finances, $500K in liquid investment capital that is earning little or nothing, stands to inherit another $1M or so in the next 10 years, and not much thrill left in day job. Here’s a guy who could put $50K into a deal, derive considerable pleasure from watching the progress, and whose nest egg could be measurably boosted if he got even a 5X pop ($250K).
2) Homer – Exited the family business, a landscaping store, for $1.5M and has accumulated retirement funds through salary, lives frugally and has plenty of liquidity, empty nesting, good health, knows and likes the entrepreneur through church. Homer could get vicarious enjoyment out of seeing the success, could risk maybe $100K, and he could loosen up and buy some toys (a new bass boat) if he makes even 2X or more.
3) Jake – Sold his community bank stock in 2007, still employed (collecting all the bad loans now on somebody else’s balance sheet!), well respected with his own investor following from the bank success, sees no new opportunities in banking but likes the sport of startups, knows the entrepreneur through long-time banking relationships that have been good, has $2M liquid net worth outside of retirement funds. Jake could probably spring for $100K, and whatever he makes will be meaningful to him.
4) Wilhelmina – Early 30’s but came into inheritance of $3M, works in large law firm, as does her husband, punishing hours and lots of business travel, no kids yet, high cash flow, could use some “psychic income” in her investing, has a good buddy from college with the next great idea. Wilhelmina is young enough to put maybe $200K at risk and see if there’s a 5X or more return to give that inheritance a positive jolt and to provide some sense of success outside the partner-track grind.
5) Sadie – Got a lucky ride as an early employee in someone else’s tech startup, 40ish, 3 kids in private schools with college ahead, divorced, making decent living as a consultant after giving priority to kids, $1M in liquidity outside retirement funds, the Ex bearing most of education costs, always wanted another spin of the wheel, has friend she knows well working on something promising. She’s got to be a bit careful, but why not put $50K on the table and see if that buys a second home or a few years of graduate school for one of the kids?
What do the above have in common? All could be considered to be “striving” – not necessarily for basic comforts and career successes, but for that extra bit of capital that can buy some satisfying experience, new toys, or a bit of bling. They won’t be hurt if they take a loss, and they most likely understand the risks.
Caution (and this is a big CAUTION), they need to be coached not to put all their “mad money” into the first round of one deal. Chances are too high that there will be a second round, or a third round, and those may be where the best returns are to be made. They need to understand the basic premise of keeping some powder dry for unexpected events.
You won’t see these people in any organized tech angel event or on any such list. They are the “Millionaires Next Door”. They may not follow the normal standards of due diligence or term sheets, and they will make their decisions 90% on a personal relationship with the entrepreneur and 10% on all other factors combined. Many of them will have good outcomes following their instincts in this manner. They and their kin collectively form an “invisible” angel network that is carrying more of the load than we realize. No one of them has the staying power or focus to fund the next Google, but you can get deals done with them. And, when they have good luck, they’ll be around for the next opportunity that you take to them.
How do you find them? It’s not through organized networking, it’s just doing your job, participating in your community, and giving others a chance to see what you can accomplish in any endeavor. You’ll come to know their full names over time, and, more importantly, they’ll come to know you.
