Seed Capital From Angel Investors: Bob Aholt, Pasadena Angels (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: You’re trying to bring some efficiency to the process, right?

Bob: Efficiency is certainly part of it. Effectiveness is another part of it; understanding correlations and causes is another part of it, so yeah, I think all those things go hand in hand.

Irina: So, you get them all to the website. And from all sources, how many pitches do you usually receive a month?

Bob: Usually we look at about 35–50 business plans a month. It varies. Last year, when things were really dark, we were down to maybe 20, but I think this month – we’re gonna have the meeting next week – we’re already at 35 and I’ve got a week to go.

And as soon as an entrepreneur puts his or her business plan on our website, we do a very high-level filtering. Are you in Southern California? Are you asking for the right amount of money? Because obviously, if they’re asking for $100 million, that’s not an appropriate angel investment. So we’ll kick those out pretty quickly. So, I would say 90% or higher of the submissions that we get on the website go into a prescreening process. That means that a member is going to call that entrepreneur and talk to him or her for some time over the phone and maybe even meet with that person. But they’re going to try to get an understanding of the company, what they do, the market size, and the various parameters we look at. And from there, the angel will go into that same website and add more information that they’ve picked up. And then once a month, we meet as a group – as a subset of a group – probably about 20, maybe 30 of us meet in a place in Pasadena. Actually it’s at Altadena’s local business technology center – and I’m the guy who heads the prescreening meeting. And what we do is we sit around for a couple of hours and out of those, say, 35 business plans, we try to whittle that down to four or eight but most likely six entrepreneurs whom we want to come in and give a screening pitch to us, which is a short pitch. It’s a 15–20 minute pitch with maybe five or ten minutes of questions and answers afterward. So, to answer your question directly, we try to physically sit with and listen to at least six entrepreneurs a month in a live meeting.

And then to continue out the process, out of those six we try and whittle those down to one, most likely two entrepreneurs whom we want to come give a full pitch, which is more like a half-hour pitch with maybe 15 minutes of questions and answers, to the full membership group. So at the screening meeting, where the six entrepreneurs are, there are maybe 20 or 30 people in a room listening to them and giving them feedback. If you make it through the screening and get to what we call our breakfast meeting, well, that’s where the entire Pasadena Angels group, all 100 members, generally – maybe 75%–90% of them are there each month – are going to listen to the entrepreneur’s pitch. So, once a month we whittle it down to one, most likely two entrepreneurs who are going to come in and give us a pitch, and that’s when things just start to get serious. Because if they can come out of this breakfast meeting with a significant level of interest, say 24, 25 members at a minimum saying that they’re interested in going into due diligence. At that point we’ll move along the scale, take the company into due diligence and we’ll start looking at the documents and doing reference checks and talking to customers and things like that.

This segment is part 3 in the series : Seed Capital From Angel Investors: Bob Aholt, Pasadena Angels
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