This past Thursday morning, William Swiggart, Norm Meisner and Richard Noyes of Beacon Angels explained how they invest. In the above photo Bill is on the right, and Norm in the middle.
Beacon Angels consist of 20 members that meet on a monthly basis, and their sweet spot is $100-$300K. They have had two exits in 5 years and a portfolio company of theirs might soon get acquired by Merck, in which case they will exceed their aim for 20-25% annual ROI over the life span of the group. They describe themselves as a "VC light" in that there is a collective focus unlike other angel groups and in that they take a small carry. The fund is evergreen and capital is raised from new members.
Swiggart, Meisner, and Noyes gave an overview of the 10 main steps to follow when deciding whether or not to invest in an opportunity and illustrated them with stories from the trenches.These 10 steps are:
1) What is the business problem to be solved and how big is it?
2) What is their solution, why is it unique, its value proposition and business plan?
3) Is a product or service prototype ready?
4) Is the addressable market confirmed through extensive research and customer contact?
5) What are the competitive advantages (e.g. IP, first mover, know-how, speed, low cost)?
6) Quality and degree of development of board of directors, management team, and advisory board?
7) Do Beacon Angels have the requisite industry expertise?
8) Does the CEO/director have the following desirable characteristics: hard-driving, hungry, industry-savvy, track record, personality (integrity and charisma), skills (listening, learning, attracting others)
9) Is the investment price attractive?
10) Is there an attractive exit strategy?
To a large extent, this list mirrors that of other investors, of course. Item 8 turns to be perhaps the most important of all, and in this, Beacon is probably not unusual. Beacon's area of expertise (ad 7) covers internet, green technology and medical devices. Beacon aim to reach 20-25% annual ROI on their portfolio, and an investment that looks to help with that aim is considered "attractive" (ad 9).
There were several members of Launchpad in the audience, another Boston based angel group. Prompted by questions about the relationship between such groups, Bill Swiggart explained that syndication is not unusual, and that angels from different groups do talk on a regular basis.