As many of you know, Baltimore Angels is a group of individual angel investors that have come together as a loose federation whose primary purpose is to spur continued and sustained economic and technological development in this region. (Obviously, they'd like to make a little coin too.) Last month, Baltimore Angels made a public call for business ideas and received 51 submissions in only a few weeks. How encouraging for Baltimore!
Yair and I submitted MyStudentGroups, a web application we built that is currently being used by Johns Hopkins to facilitate the administration of more than 300 student organizations at Hopkins. Among other group management features, it provides a budget management component that takes a lot of the paperwork out of allocating and utilizing a group's budget. Most importantly, it serves as the official mechanism by which Hopkins recognizes their student groups.
I don't intend to go into much detail about our specific idea. Rather, my intentions are to (a) document our experience for the benefit of interested entrepreneurs, and (b) provide an honest critique of the process. Head straight to My Reactions if you'd prefer to skip How It Played Out.
How It Played Out
We submitted our proposal late Tuesday night (2/10). As promised, we received word back the following Tuesday (2/17) informing us that we were one of 3 selected from more than 50 submissions. Needless to say we were ecstatic, even a little surprised. They said they'd follow up with some guidelines for our presentation shortly, and we received the additional information Friday (2/20). The document was essentially an outline that asked us to cover lots of the boring stuff (revenue projections, projected burn rate, etc.). Really, nothing that wasn't to be expected.
We spent the next four days preparing the presentation. We had already completed a lot of nitty gritty because we're in the process of pursuing a TEDCO MTTF award to support commercialization. This allowed us to focus most of our efforts on the marketing aspects of our presentation -- in other words, how were we going to get the Angels interested?
We relied quite a bit on the fact that the technology had already been created, using numbers/graphs from Google Analytics to demonstrate some already-achieved brand recognition. We worked on framing all of our negatives in a positive light. For instance, we're very strong on the technical side of things, but rather weak on the sales/marketing. We chose to appeal to the angels and their collective experience, highlighting how and where they'd be able to contribute to our idea rather than trying to brush it off as unimportant, or worse yet "something we'd figure out."
We were asked to arrive at ETC Canton at 6PM on Tuesday 2/24, with presentations beginning promptly at 6:30PM. MyStudentGroups was asked to present first, followed by Jonathan Olsen of MyCauseTV.com, then Jason Boseck of Mobile Parking. Each entrepreneur was allotted a combined 30 minutes for a presentation and Q&A. The most surprising aspect of the evening was, believe it or not, the fact that we actually stayed on schedule. We all gathered in the conference room at the ETC, entrepreneurs seated amongst angels. It was very informal without the "you're you and we're us" divide. Before getting started, angels and entrepreneurs alike gave a very quick intro (keep in mind that this was the first time Baltimore Angels gathered en masse).
Before we started, we were asked if we were willing to allow the other entrepreneurs to view our presentation. We were happy to oblige, hoping the favor would be returned when it was their turn to present. We flew through our presentation in 15 minutes without interruption (our best practice time had been 25 minutes). We immediately kicked off the Q&A with a few of our own questions in an attempt to preempt several of the concerns we anticipated, most notably that Yair and I already own and operate SmartLogic Solutions. About eight of the 11 angels present actually asked us questions, and we had to cut off the questions at 15 minutes in order to stay on schedule.
Jonathan and Jason followed, each giving us permission to stay and view their presentations. I was tempted to actually ask them questions during the Q&A, but ultimately resisted when I considered the short period allotted and the fact that I wasn't a potential investor.
Afterwards, the angels met privately for about 20-30 minutes to recap the evening. This gave Yair and I the opportunity to get to know Jonathan and Jason a bit better. We spent time talking about each of our opportunities and even shared some contacts that we thought might be helpful to each other. I was impressed by both of them and think they'll both find success soon.
About half of the angels made it over to the Hudson Street Stackhouse for a post-presentation drink. Unfortunately, only a couple stayed for more than a single round -- what do you know, most have families, hehe.
This was a fantastic experience for me. We worked on a very truncated timetable, poured a ton of effort into it, executed to my expectations, and ultimately played a role in getting this movement off to a running start. Very, very fun and exciting.
I thought the Q&A could have stood to be substantially longer. The 15-minute limit on the presentation was actually perfect. It's short enough that you really need to consider what's worth saying, but long enough to cover the most important aspects. However, our Q&A was cut off mid-questioning....I think we could have fielded questions for at least another 15-30 minutes. One angel in particular was working on a series of questions with us when we were forced to stop even though I really wanted to continue the conversation.
I think Baltimore Angels should seriously consider buying into more of an open format. By open, I mean that more of the community should be able to observe or otherwise be a part of the presentation process. Even though Jonathan and Jason each presented after us, Yair and I were both able to learn several things from observing them. For those entrepreneurs who didn't make the cut, this could serve as not only a mechanism by which they can learn from others, but it could be just the inspiration they need to really focus effectively on executing their ideas. Watching others succeed can often serve as quite the stimulus. I know that they have talked about holding an open meeting every other time the group meets - so I'm curious to see how this will play out.
One of the primary challenges at hand for the Baltimore Angels is creating a useful feedback loop for all interested parties. I think they could implement a policy that would require any presenters to allow access to a subset of other entrepreneurs that were considered, particularly the 5-6 closest to making the cut. As a protection to the presenters, they could be made privy to some of the executive details of the those that just missed the cut, and given (limited) ability to block any other entrepreneurs that appear to be in too similar of a space. It wouldn't be too dissimilar from the process by which a roundtable or networking group selects its members.
Perhaps it was due to the fact that it was the first time the Angels had gathered all together, but there seemed to be an air of uncertainty within the room, moreso amongst the angels than the entrepreneurs. I suspect that each angel had their own set of expectations for how this would play out, but that none of them were really on the same page. Despite the fact that they'll be investing independently, I think it's important that the angels work to become more of a cohesive group. They're viewed in the community as more of a collective entity rather than individuals, and it would benefit the community to have less of a moving target, so to speak. Ultimately, the goal is to identify good investment opportunities. I hope that the informal and disjointed aspects of the group don't lead them to become shy about pulling the trigger.
Lastly, it's not clear yet that the Angels have effectively positioned themselves as a first-stage funding group. Typically, for a group like this to succeed, they need to develop relationships with VC firms to which they can drive their successful investments. It's possible these relationships already exist, but I don't believe this has been made clear to the aspiring entrepreneurs. I think it's absolutely crucial that this link be created, and more importantly somehow effectively communicated to the entrepreneurs.
(All critiques/criticisms/speculations aside, I have nothing but gratitude for Baltimore Angels. Thank you guys so much for selecting MyStudentGroups!)
Some Other Random Observations/Advice
Jonathan and Jason both had extremely impressive advisory boards, including CEO's of major corporations and many business stalwarts. Yair and I brought only ourselves to the table. Though I suspect their advisory boards improved their odds during the selection process, I'm at this point unconvinced a high profile board is crucial to executing a business idea. Look honestly at your business and determine whether or not you know someone in your business network that would be able to provide valuable guidance to you.
Two of the three companies did not rely on advertising revenue. The third did, though not in the traditional Web 2.0 way of slapping some adwords or banners on a destination site. Make sure you have a revenue model that you believe in. Remember, you're going to have to convince a table of skeptics that you can actually sell the product/idea. And if you haven't even convinced yourself that your business is viable without the ad revenue, well.....good luck.
One thing that I noticed was that many (but certainly not all) of the angels became successful in service-based industries. This is interesting because typically investment is not considered for traditional service-based companies. There's no rule that you need to have first made money in the industry that you'll be investing in, but I wonder if this will lead to hesitation on their part when it comes to investing in product-based businesses.
It was obvious that Jonathan and Jason had given their presentations previously. There's nothing monumentally interesting about this observation -- it goes without saying that the more you practice and prepare for something, the better you'll execute.
It would have been nice if the Angels had committed to a longer evening. It seemed that there wasn't a real schedule involved, and as such, several Angels did not anticipate hanging out afterwards. I think we missed out on a lot of good conversation afterwards, especially considering the caliber of the individuals involved in this.
Lastly, just because Baltimore Angels have come together, it doesn't mean that they are the only source of money in this area. Don't necessarily put all of your eggs into this basket. Rather, view it as an additional opportunity and continue to pursue the options you would have prior to their establishment.
Let's Wrap This Up!
Yair and I are extremely grateful to have been selected to present to the Baltimore Angels at their inaugural meeting. I don't necessarily think that our experience will be representative of those that follow us. Like anything new, the Baltimore Angels are going to require time to take shape and to ultimately become the economic stimulus for this region that they aspire to be. These are exciting times in Baltimore.