Healdsburg venture capitalist Steve Weiss founded North Bay Angels
investment group in June 1998 with John Mackie, Dieter Thurow and Harold
Robinson. Currently, 80 members invest in Sonoma, Marin and Napa county
start-ups.
Every six weeks, the North Bay Angels meet with presenting companies,
usually two, seeking financial backing. What is the ratio of requests to
meetings?
I would say we review 200 plans per year and no more than 10 percent of
those get to a meeting. It's not that we're being exclusionary, we just pick
the best of many good opportunities.
How can applicants increase their odds for winning financial backing?
The fundamentals count. We look at the people, the technology, and the
marketplace.
What works best is to have sponsorship by a member, although we have
received good proposals directly. When young companies are searching out
financial backing, it is not unusual to intersect with one of our members and
take the process from there. Even presenters who don't get funding have a
unique opportunity to meet with a large number of qualified investors. They
get a lot of free advice. Hearing in a nonthreatening way what they are going
to hear from the real financial community is of benefit also.
Funding start-ups is a risky business. How do you minimize the risk for
your group?
Each Angel does their own due-diligence and then we share that information
with each other. For example, one member might be more knowledgeable in the
market segment, another may know more on the financial side.
Sharing due-diligence helps. But there is no such thing as a sure shot. The
only way to minimize those risks is to look for the strongest technology and
the largest market with a solid, experienced management team. The stronger
those considerations, the greater degree of likely success.
You invest money for stock. How do you track the company's progress?
We invest as equity investors to align ourselves with the company. We
obtain benefit through building the value of the equity. It's an investment of
talent, also. We offer these young companies a tremendous amount of expertise
through our membership.
How do you choose new members for your own group? Is it invitation only?
Potential members are invited to attend a business function by another
member. We want them to be appropriate for high-risk investing, meaning that
they have financial wherewithal, complying with SEC regulations.
What makes investing in Sonoma-based businesses unique?
Most of us have moved here to the North Bay. We like it. And we'd like to
see the North Bay grow and prosper without becoming another Silicon Valley.
The way to do that is to bring in high-quality jobs.
We have funded as a group eight or nine companies. About 40 percent of the
companies ultimately get venture capital funding. Alantro was one early
success. Our investors made 25 times their money on that project -- in less
than 18 months. With over 80 current members, I suppose there is a limit to
the size of the group you can have without diluting the team work, the esprit
de corp. Other groups such as Silicon Valley's, Band of Angels, has 120
members. That's probably the cut off. We are going to be moving forward in the
fall to organize a venture capital fund to move ourselves to the next level of
financing and to bring greater organization. We see this as an evolutionary
process that we're very excited about.
