By guest authors Irina Patterson and Candice Arnold.
This is the twenty-seventh interview in our series on financing for entrepreneurs. I am talking to Dick Reeves, executive director of Huntsville Angel Network that services entrepreneurs in and around Huntsville, Alabama, where it’s based.
Irina: Hi, Dick. Why don’t we start with you telling me a little bit about your background and how you became an angel investor?
Dick: Well, I am a serial entrepreneur, a technical entrepreneur. I’ve done a number of businesses in our town over the past 35 years and raised angel capital from individual, random angels for three of those businesses.
I found it a very frustrating process, and about 15 years ago got involved in the establishment of a business incubator, a technology-focused incubator here in our town. In connection with that, we decided to raise an angel investor group which could facilitate the capital raising process for both the capital seekers and the capital providers.
We had tried twice previously to put together such a group and had failed – in the 1980s and 1990s. Finally, in the early 2000s, we succeeded with the help of the Angel Capital Association.
Irina: Could you tell us more about the role of the ACA?
Dick: The Angel Capital Association put together best practices and a mechanism for mentoring groups who wanted to get started around the country. They brought together the best practices from the long-established groups in the Silicon Valley, the Boston corridor, San Diego, and Chicago and took those out into the hinterland in Huntsville, where we are, and made it possible for us to do it right.
Irina: Could you be more specific about the process?
Dick: They began holding annual meetings of their group in 2002, I believe it was, and I attended the second of those and each of those successive meetings provided a lot more information.
That’s how we got started; that’s how I got involved. I was the leader of our business incubator for a number of years and decided to get this angel group started as a part of that, to serve the clients of the incubator, but it serves a broader constituency than just the incubator. We’re five years old and have moved far beyond the incubator.
Irina: Is the incubator is still around?
Dick: Oh, yes indeed. It’s called BizTech. We’re actually located inside the incubator building. Only a couple of investment opportunities come out of the incubator each year. The angel group needs to have a half a dozen investment opportunities to keep up their members’ interest.
Irina: What is the structure of your angel group?
Dick: We’re a loose network of individual decision makers – 75 of us.
Irina: Do you have a membership fee?
Dick: We do, and that’s a difficult thing because lots of folks don’t like to pay membership fees. So, we are moving to organize a fund where we’ll have some committed capital as well as the individual members’ money available and use that to support some of our operations as well.
Irina: What is your personal industry expertise?
Dick: I am an engineer, came out of the information technology industry. I spent 35 years in the information technology business.
Irina: What is the geographical focus of your angel group?
Dick: We serve Huntsville and northern Alabama, about a 75-mile radius around our city. And we, like many angel groups, are beginning to expand outside that region so that we can syndicate deals with each other.
Irina: What is your current source of deal flow?
Dick: The first place is the business incubator because it sees a large proportion of the new opportunities – early-stage opportunities – that come up in our town.
But also we get deal flow from venture capital firms in the area that are approached by someone for whom they’re not a match but they might be for us. We get lots of personal referrals. Now that we’re five years old, our reputation has made its way around the region so we get calls from all over.
Irina: Out of all the sources of deal flow, which one is the best?
Dick: Well, the business incubator by far.
Irina: What is the best way for entrepreneurs to reach you?
Dick: E-mail or phone.
Irina: Do you get cold e-mails and calls often?
Dick: Sure. Multiple times a week.