I wasn’t going to write anything about this but when I got stared down by the double Knox, I knew it was a sign.
In the first article, I found it interesting that VentureLab has launched 19 companies in 6 years. So I went looking on VentureLab’s site to find out who that was and they list 11 graduate companies raising $42 million. Huh? Then I saw the fine print - “as of May 2006″. What?!?! This goes back to my previous post about accessibility of information and promoting our own good successes. If I were a part of the 8 companies since May 2006, I’d be a little upset that I’m not getting some link love from VentureLab.
The second article was more disappointing. To the question “How long does it take you [Atlanta Technology Angels] to decide to invest?”, Knox Massey answers (emphasis is mine):
The quickest we made an investment was two weeks. More typical is two to three months from when we meet them. We’ve worked with companies that may not be ready for up to a year. We don’t want put somebody who is not ready in front of the group.
Holy cow. Maybe it’s been too long since I raised money (1999 and 2000-1), but that time frame sounds ridiculously long to me. Maybe I’m not hip with the current fund raising time frames. When we started raising our angel round of money, it took us two months to raise $1.5 million. Sure, that fits in Knox’s time frame above but I’d be willing to bet the dollar amount we raised is a factor of five to ten more than what ATA invests. By comparison, when we raised our venture round it took us 10 months to raise $10.5 million in venture capital (I’ve posted more about this experience on my personal blog here and here).
This is one of the reasons I was so stoked to hear about the Edison Fund at Georgia Tech. The time that an entrepreneur spends on fund raising is time he/she isn’t spending creating value in their enterprise. I think angels and VCs should be more aware of this and avoid wasting entrepreneurs’ time. The Edison Fund is fairly new but my hope and expectation is that investments will move fairly quickly from application to funding or rejection. I think this will be beneficial to all involved parties.
Which leads me to TheFunded.com. Knox has dished on the site but I think it’s a great resource for entrepreneurs. The comments on ATA are fair based on what I know. Nothing outrageously negative but pretty informative to entrepreneurs before they pitch to ATA (yes, I’m a TheFunded.com member but I never ranked ATA because I don’t have any tangible experience with the group). Knox thinks the site instills fear. I’d say it only instills fear in those who need to be worried. Worried your terms aren’t competitive? That’ll get exposed. Worried you aren’t responsive? That’ll get exposed. Are you rude to entrepreneurs? That’ll get exposed. More than anything, I’d use The Funded to weed out the absolute worst investors when you raise money.
So have you raised money recently? How did it go and how long did it take for you to raise your round?
Hi Sanjay,
Boy, you drank some strong expresso this week!
First, if I had invested in Digital Envoy as an angel investor in 1999, what would have been my return as an “angel” investor when the company sold? (not as a VC or part of the carve out for the management team)
4X?
3X
Less than 1X?
Second, the market changes Sanjay. 1999/2001 was a long, long, long time ago.
Third, part of the work I do as a BOD member of the Angel Capital Association is to help bring awareness of this type of investing. That’s why you see a “double Knox”. As you promote on your blog, I am trying to bring “accessibity” to information about angel investing and to also promote angel investing “successes” on a local and national scale. Helping do that nationally and locally is part of what I do for ACA.
Fourth, the Edison Fund is a 501 c3, non-profit fund. Not having to report to an LP who expects a “higher than average” return makes for a quicker investment decision!
Fifth, sure I rag on Adeo. He loves the controversy. He and I are hopefully scheduled to talk in a week or so. Yes, I do think his site instills fear–which I do not think is healthy. But, that is Adeo’s choice to make.
Last, the relationship between an entrepreneur and an investor(s) should be a trusting, working relationship–not an antagonistic one. If an entrepreneur thinks a potential investor is “wasting their time”, they should walk away. If I think an entrepreneur is speaking out of the side of his mouth, I’d walk away. I have before!
I could go on, but you are always welcome to call or email, Sanjay.
Sigh. Yeah, I know. Story of any large enterprise… they do a big Website update, then it freezes in amber. I can’t find anyone able/willing to post new information.
Newer stuff is available on my blog and on the filesharing site linked above. I’ll keep hammering on the GT side.
So I’ll take the easy one first. Stephen - no worries, I think we all understand. But hopefully this will kick something into action.
Knox - long comment, I’ll try to respond to everything but feel free to re-comment if I miss something. BTW, I don’t drink coffee or espresso.
1) Returns for DE’s angels really wasn’t the issue or subject of the post. You already know the answer (based on how you asked it) and so the question was meant to antagonize me. If you’re going to antagonize entrepreneurs or people trying to start a discussion, you aren’t helping. I won’t say anything further on the issue but people who know me know what I think about the DE exit.
2) This is why I said it’s been a long time since I raised money. Perhaps you should re-read the post above.
3) I wasn’t dinging you on the PR stuff. In fact, some local companies should do more. See my previous posts on this subject. More attention to our neck of the woods is a good thing.
4) Sounds like you’re worried about a little competition from the Edison Fund. Hopefully this competition will spur some changes in the capital markets in Atlanta.
5) More information is a good thing. Maybe not for those who hold the purse strings but it is for those of us who are starting companies and creating value.
6) Funny you end on antagonizing when your first question was meant in just that way. So what was it again that you said I should do?
Nope, the angel investor exit at Digital Envoy wasn’t the issue of your post, but I’m surprised you would criticize what ATA tries to do in the Atlanta community when it was angel investors that gave you your start at Digital Envoy.
I also think what happened to the angels at the Digital Envoy exit is an important lesson for angels everywhere.
I’m actually looking forward to co-investing with the Edison Fund. I wish it the best!
Funny, I don’t think I ever criticized angel investors. My only criticism was with the speed with which ATA or its members fund entrepreneurs. Two to three months is an eternity for an entrepreneur but maybe it takes an entrepreneur to recognize that. And ATA never was involved in Digital Envoy although some of the members were. Angels may make up ATA but ATA doesn’t speak for all angels. I suspect that had ATA existed back when we were fundraising (yes, fundraising happened before ATA existed), we wouldn’t have been given the time of day when we pitched.
Also, I’m glad you admitted that you already knew the result from the Digital Envoy exit and your question was posed just to antagonize. Like I said, those who know me know what I think about the exit and what happened. Mind you, I left Digital Envoy in 2005 and remained only a board member and not a member of management. I was totally aligned with the angel investors but unfortunately that wasn’t enough at the end of the day. The behavior (good and bad) of individuals and firms in the exit will be remembered by everyone, especially me. But like I said, ATA was never involved in the funding and that wasn’t what this post was about nor did I ever say anything critical of any individual angel investor in my post or followups.
You can continue to read whatever you want to into what I’ve written but the plain facts are what you are implying I said, I didn’t. And the question you posed was merely to antagonize. If that’s what you think are helpful to the community and entrepreneurs in general, then good luck to you.
I could throw in a barb at this point about what you thought about a group of local folks starting a local Y-Combinator type firm but I think I’ve made my point.
I would most certainly welcome a “local” Y-Combinator type firm in Atlanta. That would be wonderful news.
Funny. It was reported that you said you “didn’t see a need for a fund” in Atlanta. Which I suspect is closer to the truth that your feigned response above. Competition isn’t a good thing for folks who want to keep things status quo. Be they entrepreneurs, VCs, or angel investors.
I was likely speaking of a sidear “fund” within ATA, Sanjay.
I would indeed welcome a local Y-Combinator type fund in Atlanta. Additional capital within Atlanta has been one of our missions since 1998. You might see a Y-Combinator fund (or QuickStart, etc) as competition for ATA. I see it as a more early stage capital for the market.
Sorry, I was going to let this die but I’ve gotten a number of emails in support and I can’t. No, ATA doesn’t have a “fund” and so this discussion wasn’t about a side fund with ATA, it was about a competitive fund that you didn’t want in Atlanta. The only reason I can see that you’d take that position is because it would have detracted from your position over local entrepreneurs. If you want to kid yourself about what you’ve said and believe, fine. But you’re not going to do the same thing here and not get called out for it.
You know the funny thing is I started this post trying to be cautiously positive. Nothing I said initially was meant to detract anything that ATA has done except to maybe say “let’s talk about how long it should take to do deals”. You could have taken the very reasonable approach that Stephen took and say “hey, let me see if I can fix this”. Instead, you took the approach of bringing in issues that weren’t relevant and be antagonistic towards myself and the local community.
This, in a nutshell, is what is wrong with fund raising in Atlanta.
That’s it. I’m done with this thread. Feel free to have the last laugh and last comment. I’m not posting on this thread anymore. I feel like I’m arguing with a brick wall and I know my time is better spent elsewhere. If only all local “angels” felt like they could add more value by working with companies they invested in instead of being in a flame war on a blog, we’d not have this discussion in the first place.