Seed Capital From Angel Investors: Brian Garrett, Co-Founder And Managing Director, Crosscut Ventures (Part 2)

By guest authors Irina Patterson and Candice Arnold

Brian: We’ve shared a lot of our interesting deals with the super angel or micro cap funds up in Silicon Valley and New York. We’ve been able to get them to co-invest with us on Southern California opportunities because I think they trust us and know that we’ll do the heavy lifting needed in the early stages of company formation for deals that are right in our backyard.

Now, fortunately, they are starting to return the favor, nd so we are, in certain situations, being invited in to New York or Silicon Valley opportunities where they look at Crosscut as a slightly different beast from the other potential investors they have in Silicon Valley to choose from.

What I mean by that is, we have a different DNA; we have different successes that make Southern California unique; we have a different Rolodex of individuals who can help these young companies, so we look and smell a little bit different from the rest of the Silicon Valley funds, which makes for an interesting addition to their syndicates.

Irina: What’s the total number of your portfolio companies?

Brian: We’ve done 12 deals over the past 24 months; four of them have been in Northern California and eight in Southern California.

Irina: What is your primary source of deal flow?

Brian: Rick [Smith] and I have been doing early stage venture together here in Southern California for ten years now. So, we have been very active in the local community. We speak a lot. We’re out in the public, kind of, waving the flag that is Crosscut.

Most of our deal flow comes from trusted sources, people we’ve known, but most important, the best source of deal flow has come from that network of people who have committed capital to our fund, who know how hard we work with our entrepreneurs and the type of value we hope to contribute in that early formation phase of a business.

So, we get a lot of our deal flow from successful entrepreneurs who may be active angels, but they’re still out running businesses and don’t have 100% of their time to dedicate to their angel work.

They may get something, because quite honestly, new entrepreneurs want to talk to great entrepreneurs, successful entrepreneurs first. They want to talk to venture people second.

We get a lot of the flow from those entrepreneurs whom these next generation of entrepreneurs are trying to approach, and those entrepreneurs/angels generally hand it off to us by saying, “You should talk to Crosscut, and see if they’re interested.”

Irina: What is the best way for entrepreneurs to reach you?

Brian: This is a pretty much industry standard answer: It’s always from a trusted referral. We do take things over the transom. Our e-mail addresses are available on our website, but it’s really best if someone who knows us is willing to vouch that you’re a good person, you’ve got an interesting idea, and it’s worthy of a meeting. That’s the best way, because we are inundated with deal flow right now.

There is so much innovation happening down here in this market – actually across the country, obviously, but specific to Southern California – I don’t think it gets publicized as much as Silicon Valley and New York, that seems to be where all the media and the TechCrunchers of the world are focused, but we arguably have more innovation than this market has ever seen at a time when the actual local sources of capital have dwindled to five or six active venture firms total.

The truth is, my partner and I see a lot of deals. We get a lot of inbound stuff, and it’s hard to figure out what’s worthy of spending time with and what’s not. So, it’s always best to come through a trusted referral.

Irina: On average, how many deals do you get per month?

Brian: Between Rick and me, we’re probably getting more than 20 plans a day. Call it 500 different inbound opportunities of companies looking for funding and looking for input and looking for help.

Really, we’d love to meet with each one of them. It’s an idea; we want the Southern California ecosystem to thrive whether [or not] your opportunity is a fit for our firm. We just want success down here.

This segment is part 2 in the series : Seed Capital From Angel Investors: Brian Garrett, Co-Founder And Managing Director, Crosscut Ventures
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