Thursday, March 15, 2007

Angel forums (for cleantech)

I am beginning to lose patience with angel "forums" for cleantech. These forums are aggreate collections of individual investors that pool their collective resources to leverage screening committees and larger economies of scale in deal flow and flow analysis.

Examples in the bay area include:
Band of Angels
Sandhill Angels
The Keirestsu Forum

My experience with these groups thus far has been one of limited traction. In general, I've found these groups to be:

- Less focused expertise. At least in cleantech, the partner and technical teams at MDV, VantagePoint, Battery, Kleiner are vastly more knowledgeable than these angel forums in the realm of cleantech. Some VC groups have had in-the-business veteran wind and mechanical engineering knowhow at least relevant to the realm. The angel groups, on the other hand, seem to be empty of real world expertise, which should probably not come as a surprise given the newness of this industry. However, it still doesn't stop them from being opinionated. Point in fact was an argument that "distributed power is never going to happen" with the clean power committee at one of these angel groups. I struggled to keep my patience with a very ornery, argumentative "thought leader" that told me that large scale, central grid distribution was the only realistic way to service electric power in the U.S., now and forever. Perhaps said individual was testing my ability to react to wrongheaded and stubborn viewpoints, but quite honestly, that's a test I am going to fail every time if the other side is simply dead wrong.

- Less tolerance for risk. The angel screening groups I've met with want to see real paying customers. Wasn't that what I was meeting you to help fund? You are certainly not "seeding" anything if you expect concrete on the floor, and a cash register with money already flowing into it. I have no problem with groups that want to see proven market success, but then they should probably change their name to "expansion" forum - because their capital is expanding, not seeding anything.

- Less leverage. Not clear to me, as I've not worked through deal sheets with either. But my sense is that the term sheet negotiation is nearly equivalent between VCs and angel forums - and yet - you get more transitive leverage, more sustained support, more general company support from the VCs.

Comments from other entrepeneurs and their successes or challenges with Angel forums welcome.