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Seed Capital from Angel Investors: Raymond Chan, Tech Coast Angels (Part 1)

Posted on Wednesday, Sep 29th 2010

By guest author Irina Patterson

This is the twenty-sixth interview in our series on financing for entrepreneurs. I am talking to Raymond Chan, a member of Tech Coast Angels. TCA has over 260  members and provides funding and guidance to early-stage, high-growth companies in Southern California.

Irina: Hi, Ray. Let’s start with your personal background.

Ray: I have been an angel investor for the past twenty-some years. I’ve been investing into startups — mostly in communications and consumer Internet. I joined Tech Coast Angels about three and a half years ago. Since then I have been involved with a group and made several investments over the past few years, and on top of that I’m on the board of directors of TCA. I’m also in charge of the marketing and PR, and all of our entrepreneur programs for the organization.

Irina: What’s your industry expertise? Where did you work before joining Tech Coast Angels?

Ray: I worked a long time ago for a company called Computer Automation, a mini computer company, but it’s no longer in existence because it was many years ago, but since then I have been investing into different companies. In the past twenty years I have been doing pretty much startup investments as well as helping companies, hands on — when we invest, we invest our capital as well as our own time.

Irina: So, you’ve been investing for a while on your own before you joined TCA, right?

Ray: That’s right.

Irina: What is the organizational structure of TCA?

Ray: The organization was founded in 1997. And right now we have over 267 members. We believe we are the biggest angel organization in the country, and just because of the size of our membership it is getting bigger and bigger. We have five networks: Los Angeles, Orange County, San Diego, Westlake/Santa Barbara, and the Inland Empire.

It’s all individual membership, and each individual makes his or her own investment decisions. Now, last month, we also added a fund into our investment mix. So, basically in addition to the individual investors that invest themselves, we also have a fund that we put together, with that we can also make investment as well. The fund is called the ACE Fund, it stands for Angel Capital Entrepreneur fund. We just announced it in August.

Irina: And how did you raise funds for this fund?

Ray: It’s raised from the TCA members ourselves, as well as from outside accredited investors.

Irina: How big is the fund?

Ray: We are getting close to $3 million. It’s not totally closed yet, we close it on October 30, but we are approaching a $3 million dollar mark.

Irina: What is your region? What is your focus?

Ray: Me, I’m an Orange County network member, but as mentioned, I’m also on the board of director of TCA. Each network has their own executive committee. They run their local affairs. However, we also have a board of directors that oversees all affair, rules and practices of all of the five networks. I’m a member of the board.

Irina: So each network has its own regional focus, right?  Does the Orange County network invest mostly in Orange County companies?

Ray: Yes, that’s correct.  Each network serves and supports, screens, and evaluates the entrepreneurs in their territory. What we do is make it easy for entrepreneurs, all they need to do is just go to our website, submit a very simple application, and there we ask them for the location of their companies, and then we ourselves will divide and reply to each entrepreneurs depending on what area, what territory — locations they are in.

We try to get back to each entrepreneur right the way. If it is a rejection, we tell them the reason. But if we decide to accept their applications, we’ll invite them to come to our pre-screening, and they will have ten minutes with our pre-screening committee, just for give us an idea face-to-face about their business and tell us why we should work together.

And once they pass the pre-screening, once the pre-screening committee says, well this is a company that we should look into it further, then we invite them to a regular screening.  We hold them once a month in Orange County, for example. And we usually screen three to four companies each screening.

This segment is part 1 in the series : Seed Capital from Angel Investors: Raymond Chan, Tech Coast Angels
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