The Changing Nature of Angel Investing in
the Bay Area
(And the syndication opportunities it provides)
Angel Capital Summit
March 21, 2012
Denver
www.baeworkshop.com
Angel Investing in the Bay Area
• Bad Old Days
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In the last quarter of the last century
Between 20 and 30 angel groups
Ranged from moderately active to social gatherings
Met once a month, some charged (a lot)
Individuals invested a small amount, usually less than $20k
• In the last 18 months the ecosystem has evolved
significantly

We will focus on these changes, and the opportunities they
pose
Most Active Bay Area Angel Groups*
Firm
$
Invested
#
Deals
K-4 (4 chapters)
$33M
31
$250k - $3M
No
Investors’ Circle
$9M
NA
Max of $5M
No?
Band of Angels
$6.5M
19
$500k
Yes?
Angels’ Forum
$5M
5
$200k - $1M
No?
Life Science Angels
$4.5M
7
$100k - $1M
Yes?
Golden Gate Angels
$2.5M
NR
* Data from 2007
$ Range
$50k - $1M
Syndicate ?
?
New Players in the last 18 Months
Proliferation of New Players
• On-line
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Angel.co (Angel List)
Caplinked
Both are loose
communities of accredited
investors and
entrepreneurs
• Super Angels / Micro VCs
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Mainly ex-entrepreneurs
Who got bought out
Invest as individual angels
& in small groups
• New models
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Y-Combinator
BAE Workshop
• Large VC firms

Set up small funds to
invest in seed stage, even
pre-revenue
What Drove the Change?
• eBay bought PayPal for $1.5B

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Created excess executives with cash to burn
Reid Hoffman started LinkedIn
Elon Musk started Tesla and Space X
Peter Thiel started investing in start-ups
• Google had an IPO
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A lot of early employees entered the 1%
New angel groups sprouted
XG Ventures, XG Silicon Valley, XG North Bay, etc.
• Other IPOs and acquisitions added to the mix
• Suddenly a lot of new faces entered the arena, and
some with new business models, too
New Entrants Filled a Void
• Most angel groups became more conservative
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At least with their tech investments
Looked for market validation, or traction
Started to look like VCs, but with less money
• Few if any remained true seed-stage investors
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Created classic Catch 22 for entrepreneurs
Can’t get money without customers – Can’t get customers
without money
• Micro VCs & Super Angels filled that void
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Both invest in pre-revenue companies
Form a viable bridge between F&F and Series A
Syndication Opportunities Vary Greatly
• Traditional angel groups have limited syndication
opportunities
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Keiretsu Forum syndicates only with other chapters
Most others rarely syndicate outside their organization
Of course they may bring in a personal friend
Not fertile ground
New Groups Offer Varied Opportunities
• On-line
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Unlimited ability to syndicate – in principle
Most deals gravitate to a few individuals
Little screening of start-ups or investors that register
I know there must be some good companies there, but I’ve
never encountered one
The couple of companies I’ve suggested register, all highly
fundable, went nowhere.
• Big-Dog VC firms
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New small funds
Little data on their syndication habits
Less likely to syndicate than with Series A or B – can do the
whole thing themselves
Various Opportunities
• Super Angels
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Vary in degree of diligence performed
More “smart money” than most angel groups
Wide open to syndication
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Willing for you to invest in their companies
Open to investing in your companies
• Micro-VCs
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Similar in most respects to Super Angels
Often from same background
They invest other people’s money in addition to their own
Similarly open to syndication
Super Angels & Micro VCs
• I have found so far 157
• But with more big name IPOs in the offing, likely to be new
surges of new angels
• Looks like a growing presence
• Looks like has staying power
• In short, with this group, the syndication opportunities look
strong and stable
Super Angels / Micro VCs – a Snap Shot
Company
Contact
Title
E-Mail
Focus
Range
Camp
Ventures
Jerome
Camp
Founder
jerry@campventures.c
om
Agnostic
$500k - $1M
Cardinal
Ventures
Christian
Borcher
CoFounder
christian@cardinalvc.c
om
Wireless,
internet SW
$500k - $3M
Catamount
Patrick
Fitzgerald
Partner
patrick@catamountve
ntures.com
Information
Technology
??
Crosslink
Capital
Jim
Feuille
General
Partner
jmpf@crosslinkcapital.
com
Energy, IT
??
Defta
George
Hara
Chairman
ghara@deftapartners.
com
Information
Tech
$500k - $3M
Felicis
Ventures
Aydin
Senkut
Founder
aydin@felicisvp.com
Consumer
Internet
$25k - $100k
Floodgate
Mike
Maples
Founder
mike@floodgate.com
Founders
Fund
Ken
Howery
Managing
Partner
khowery@thefounders
fund.com
?
Internet
$200k - $500k
$500k - $1M
New Business Models
• Screen companies to those that fit the model
• Invest same amount in all companies chosen
• Y-Combinator
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Restricted, in principle, to start-ups who know what a
Y-combinator does
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Investments only by the founders and Peter Thiel
No opportunity to syndicate that I can see
Have produced some real winners
 Xobni
 Dropbox
 A few others
A combination of micro-VC and super angel
New Business Model
• Bay Area Entrepreneurs Workshop

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Agnostic regarding technical area and stage
Screen companies for ‘fundability’ in two ways
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Executive Summaries
30-minute investor pitch w/ 30-minute Q&A
Focused on getting participants funded at VC level
Use micro VCs and super angels to let participants get enough
traction to become attractive to VCs
Invest same amount in each participant – ensuring our
investors are invested in winners
Open to investors from anywhere
• Partnered for success



Business Catapult
Start-up Weekly
LinkSV
Bay Area Entrepreneurs Workshop
•
Eight three-hour sessions, weekly


Lead attendees in creating all plans and documents needed to secure
VC funding
Sessions led by domain experts in go-to-market, marketing, finance,
etc. Plus VCs and angels
•
We invest $10k - $20k in each company that qualifies for the
workshop. We know our investors are invested in the winners
•
Post-workshop we match graduates to VCs who invest in their
space, at their stage, and in the amount they are looking for
•
Based on past results, we expect to get ~ 40% of our attendees
funded
•
Consequently our investors can expect an increase in value of
~ 5X in a time of 9 - 24 months
Thank You
Ralph Patterson
CEO
BAE Workshop & Investments
www.baeworkshop.com
925-200-1895