Business
Angel Investors Are Foundation For America’s Success
The Entrepreneur
By Marc Kramer, For The Bulletin
Richard J. Anthony, Sr., is the founder and managing director of The Solutions Network, a management consulting firm, and is also the founder of The Entrepreneurs Network, which brings together investor angels and entrepreneurs. The Entrepreneurs Network is sponsored by the University City Science Center and the Private Investors Forum.
Mr. Anthony talks about how his organization supports entrepreneurs and requirements for entrepreneurs to pitch their plan to his members.
Marc Kramer: What is The Entrepreneurs Network and how is it different from other networking groups?
Richard Anthony: First of all, The Entrepreneurs Network is a venue, not a membership group. For most of its nearly ten-year history, the venue has been the Radnor Hotel in St. Davids, where we meet about every seven weeks for 2.5 hours for the primary purpose of being of help to one another. At each meeting, five entrepreneurs each make a 12-miunute presentation. It’s a friendly meeting place for aspiring and serial entrepreneurs to network with angel investors and some service providers who can be of help to early stage ventures. The feedback I get after every meeting is that it is the best gathering of its kind for early stage ventures, mostly because of the quality of the people who attend and the camaraderie we are able to encourage with the way we run the meetings. We take our business seriously, but not ourselves. We have fun. I affectionately refer to The Entrepreneurs Network as an upscale flea market for entrepreneurs and angel investors.
MK: How long has The Entrepreneurs Network been in existence?
RA: The genesis for what has become The Entrepreneurs Network was the summer of 2000. I was receiving a number of phone calls and e-mails from successful businessmen who had left C level positions with privately held businesses. Because of my background as a human resource management consultant and as an angel investor, I’m on many networking lists. But these contacts were different. They had experience, money and a strong desire to start or buy a company rather than return to another payroll job. Yet, in spite of their corporate success, they were finding that their networks weren’t of much value outside of the traditional corporate setting. People weren’t returning their phone calls the way they used to and these aspiring entrepreneurs were coming to grips with having to learn new attitudes and behaviors in order to pursue their dreams of independence. Having taken the plunge myself when I started my own business, I could empathize with them. So, I convened a meeting of about six of them. The next meeting, we had twice as many. And so it went for several months as the format for The Entrepreneurs Network was beginning to develop. Since then, we’ve had about 55 meetings, provided a stage for over 240 early stage ventures and hosted well over 2500 meeting attendees.
MK: What is your mission?
RA: To provide a venue for aspiring and serial entrepreneurs to meet in an informal, friendly environment with prospective investors and others who may be of help. In my consulting practice, I help clients formulate mission and vision statements as the touchstones for goal setting and strategic planning, so I have been diligent in crafting a mission statement for The Entrepreneurs Network. As I said before, it’s not a membership group. No dues. But there are three rules: first, no job seekers because there are better places to look for a payroll job; second, people have to be willing to share their experience and network to be helpful to others in pursuit of their own agenda; and third, no overt proselytizing by professional service providers who attend. That means, that if I see a service provider working the room with a fist full of business cards, that person isn’t invited back. The reason is that the people who attend our meetings must be able to let their guard down without any concern about being put upon by sales people. That’s one of the ways we maintain a friendly, informal environment for the 50 or so people who attend our meetings.
MK: How much in revenues do the companies apply have to have?
RA: We haven’t established a minimum. Most of the five ventures that present at meetings have little or no revenue. They are truly early stage. Some might have $100 to $200 thousand. Many are just barely beyond proof of concept. However, none of them are frivolous. The basics are in place: a business plan, a family-and-friends round, maybe some funding from Ben Franklin, a core management team and a clear vision of what could be. These are serious, bright people who are betting everything on being right, usually in the face of the enormous odds against them.
MK: What is the application process?
RA: I normally put the word out about six weeks before each meeting that we are accepting nominations for the five 12-minute presentation slots featured in every meeting. When I’m contacted by phone or e-mail, I usually request an executive summary after explaining what the meetings are and what they are not. Some people are intimidated by a 12-minute presentation without Power Point or very much else in the way of visual aids. I talk with one or more of the principals, sometimes meet with them, then, select the five that will have a slot for a 12-minute presentation. We generally do not accept real estate deals or main street businesses. I’ve learned that they don’t do well among the people who attend The Entrepreneurs Network.
MK: How many investors do you typically attract?
RA: In a group of 50 attendees, about one-third are looking for opportunities. Most are angel investors. We occasionally attract a private equity group or a venture capitalist (VC), but our presenters are normally too early for institutional investors.
MK: What is the average size investment?
RA: I don’t track the frequency or size of investments, for two reasons. First, I have no stake in whether or how much money is raised. I’m simply providing a venue for networking. Second, both entrepreneurs and investors tend to be very discrete in early stage. And since there is little factual information that is public, rumors abound about transactions and the numbers can be inflated. My guess is that investments have been in the range of $50K to $100K.
MK: Are you seeing an increase in investment?
RA: No. Not for early stage ventures. I think angels are still recovering from the hit most took in the equity and real estate markets. As one of them said to me recently, “I’ve put aside a limited amount to invest and I’m in no hurry. I’m taking my time and looking very hard at any deal.”
MK: How many companies have received funding?
RA: As I said before, I don’t have verifiable numbers on how many ventures have received funding as a direct result of presenting at The Entrepreneurs Network. Often, it’s cumulative. I mean, a venture may take a practice run at one of our meetings, then, go on to present to other angel groups, possibly make the cut for the Angel Venture Fair or succeed with an application to Ben Franklin. So, over time, a venture can gain momentum and have a better story six months after presenting with us. So, if only ten ventures have received funding shortly after presenting at one of our meetings, I’d like to think that the experience contributed to ten times that number eventually receiving significant funding. I believe that’s the role of The Entrepreneurs Network - to give early stage ventures a nudge.
MK: What industries have the best chance of receiving investment in 2010?
RA: Technology, health care, Internet. I personally have a special interest in green ventures and innovative products and services for the senior market.
MK: What could the state and/or federal government do to improve funding opportunities for early stage companies?
RA: Short of creating seed fund, government could provide tax incentives for angel investors or create programs like the one Steve Harris administered a few years ago for Ben Franklin that limited an angel investor’s loss in certain circumstances. I believe there’s an even bigger role for secondary schools and colleges and universities to teach the principles of entrepreneurialism and the free market system so that young men and women begin to see the alternatives to corporate jobs.
MK: What advice do you have for aspiring entrepreneurs?
RA: I asked the same question of a first-time entrepreneur just a couple of weeks ago. I was interviewing him for a local television show I do called, you guessed it, The Entrepreneurs Network. He and his partner traded good jobs in the pharmaceutical industry to start an artisan cookie company. Without hesitating, he looked right into the camera and said, “I’ve got three words. Just do it!” In his case, he and is partner had done their homework before deciding to take the plunge, so they understood the risks and had a plan to deal with them. But his point was, don’t be frightened by the uncertainties of starting an enterprise. After the research and the planning, just do it to get the momentum started.
Marc Kramer, who is the author of five books and faculty member at the Wharton School of Business at the University of Pennsylvania, is a serial entrepreneur.
Mr. Anthony talks about how his organization supports entrepreneurs and requirements for entrepreneurs to pitch their plan to his members.
Marc Kramer: What is The Entrepreneurs Network and how is it different from other networking groups?
Richard Anthony: First of all, The Entrepreneurs Network is a venue, not a membership group. For most of its nearly ten-year history, the venue has been the Radnor Hotel in St. Davids, where we meet about every seven weeks for 2.5 hours for the primary purpose of being of help to one another. At each meeting, five entrepreneurs each make a 12-miunute presentation. It’s a friendly meeting place for aspiring and serial entrepreneurs to network with angel investors and some service providers who can be of help to early stage ventures. The feedback I get after every meeting is that it is the best gathering of its kind for early stage ventures, mostly because of the quality of the people who attend and the camaraderie we are able to encourage with the way we run the meetings. We take our business seriously, but not ourselves. We have fun. I affectionately refer to The Entrepreneurs Network as an upscale flea market for entrepreneurs and angel investors.
MK: How long has The Entrepreneurs Network been in existence?
RA: The genesis for what has become The Entrepreneurs Network was the summer of 2000. I was receiving a number of phone calls and e-mails from successful businessmen who had left C level positions with privately held businesses. Because of my background as a human resource management consultant and as an angel investor, I’m on many networking lists. But these contacts were different. They had experience, money and a strong desire to start or buy a company rather than return to another payroll job. Yet, in spite of their corporate success, they were finding that their networks weren’t of much value outside of the traditional corporate setting. People weren’t returning their phone calls the way they used to and these aspiring entrepreneurs were coming to grips with having to learn new attitudes and behaviors in order to pursue their dreams of independence. Having taken the plunge myself when I started my own business, I could empathize with them. So, I convened a meeting of about six of them. The next meeting, we had twice as many. And so it went for several months as the format for The Entrepreneurs Network was beginning to develop. Since then, we’ve had about 55 meetings, provided a stage for over 240 early stage ventures and hosted well over 2500 meeting attendees.
MK: What is your mission?
RA: To provide a venue for aspiring and serial entrepreneurs to meet in an informal, friendly environment with prospective investors and others who may be of help. In my consulting practice, I help clients formulate mission and vision statements as the touchstones for goal setting and strategic planning, so I have been diligent in crafting a mission statement for The Entrepreneurs Network. As I said before, it’s not a membership group. No dues. But there are three rules: first, no job seekers because there are better places to look for a payroll job; second, people have to be willing to share their experience and network to be helpful to others in pursuit of their own agenda; and third, no overt proselytizing by professional service providers who attend. That means, that if I see a service provider working the room with a fist full of business cards, that person isn’t invited back. The reason is that the people who attend our meetings must be able to let their guard down without any concern about being put upon by sales people. That’s one of the ways we maintain a friendly, informal environment for the 50 or so people who attend our meetings.
MK: How much in revenues do the companies apply have to have?
RA: We haven’t established a minimum. Most of the five ventures that present at meetings have little or no revenue. They are truly early stage. Some might have $100 to $200 thousand. Many are just barely beyond proof of concept. However, none of them are frivolous. The basics are in place: a business plan, a family-and-friends round, maybe some funding from Ben Franklin, a core management team and a clear vision of what could be. These are serious, bright people who are betting everything on being right, usually in the face of the enormous odds against them.
MK: What is the application process?
RA: I normally put the word out about six weeks before each meeting that we are accepting nominations for the five 12-minute presentation slots featured in every meeting. When I’m contacted by phone or e-mail, I usually request an executive summary after explaining what the meetings are and what they are not. Some people are intimidated by a 12-minute presentation without Power Point or very much else in the way of visual aids. I talk with one or more of the principals, sometimes meet with them, then, select the five that will have a slot for a 12-minute presentation. We generally do not accept real estate deals or main street businesses. I’ve learned that they don’t do well among the people who attend The Entrepreneurs Network.
MK: How many investors do you typically attract?
RA: In a group of 50 attendees, about one-third are looking for opportunities. Most are angel investors. We occasionally attract a private equity group or a venture capitalist (VC), but our presenters are normally too early for institutional investors.
MK: What is the average size investment?
RA: I don’t track the frequency or size of investments, for two reasons. First, I have no stake in whether or how much money is raised. I’m simply providing a venue for networking. Second, both entrepreneurs and investors tend to be very discrete in early stage. And since there is little factual information that is public, rumors abound about transactions and the numbers can be inflated. My guess is that investments have been in the range of $50K to $100K.
MK: Are you seeing an increase in investment?
RA: No. Not for early stage ventures. I think angels are still recovering from the hit most took in the equity and real estate markets. As one of them said to me recently, “I’ve put aside a limited amount to invest and I’m in no hurry. I’m taking my time and looking very hard at any deal.”
MK: How many companies have received funding?
RA: As I said before, I don’t have verifiable numbers on how many ventures have received funding as a direct result of presenting at The Entrepreneurs Network. Often, it’s cumulative. I mean, a venture may take a practice run at one of our meetings, then, go on to present to other angel groups, possibly make the cut for the Angel Venture Fair or succeed with an application to Ben Franklin. So, over time, a venture can gain momentum and have a better story six months after presenting with us. So, if only ten ventures have received funding shortly after presenting at one of our meetings, I’d like to think that the experience contributed to ten times that number eventually receiving significant funding. I believe that’s the role of The Entrepreneurs Network - to give early stage ventures a nudge.
MK: What industries have the best chance of receiving investment in 2010?
RA: Technology, health care, Internet. I personally have a special interest in green ventures and innovative products and services for the senior market.
MK: What could the state and/or federal government do to improve funding opportunities for early stage companies?
RA: Short of creating seed fund, government could provide tax incentives for angel investors or create programs like the one Steve Harris administered a few years ago for Ben Franklin that limited an angel investor’s loss in certain circumstances. I believe there’s an even bigger role for secondary schools and colleges and universities to teach the principles of entrepreneurialism and the free market system so that young men and women begin to see the alternatives to corporate jobs.
MK: What advice do you have for aspiring entrepreneurs?
RA: I asked the same question of a first-time entrepreneur just a couple of weeks ago. I was interviewing him for a local television show I do called, you guessed it, The Entrepreneurs Network. He and his partner traded good jobs in the pharmaceutical industry to start an artisan cookie company. Without hesitating, he looked right into the camera and said, “I’ve got three words. Just do it!” In his case, he and is partner had done their homework before deciding to take the plunge, so they understood the risks and had a plan to deal with them. But his point was, don’t be frightened by the uncertainties of starting an enterprise. After the research and the planning, just do it to get the momentum started.
Marc Kramer, who is the author of five books and faculty member at the Wharton School of Business at the University of Pennsylvania, is a serial entrepreneur.
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