FREQUENTLY ASKED QUESTIONS
WHAT IS ANGEL INVESTING?
Check out this short “Angel Investing 101” video by Jeffrey C. Robbins of Avisen Legal:
WHAT IS AUSTIN AREA ANGELS?
Austin Area Angels (AAA) is a collaborative group of angel investors based in Southeast Minnesota dedicated to assisting and facilitating introductions of innovative, early stage companies in need of funding to its accredited angel investors. We accomplish our objectives by providing a platform for our members to view and exchange information about investment opportunities.
Our members collaborate on vetting deals and due diligence but make individual investment decisions. Austin Area Angels is member-managed and works through the commitment of volunteer time from its members. It is not a fund. It is an organized group of accredited investors affiliated with Austin Community Growth Ventures with interest in investing in the same types of businesses.
AAA is a member of the Angel Capital Association.
ORGANIZATION PURPOSE
Austin Community Growth Ventures (ACGV) was established in 2015 by the Development Corporation of Austin’s Austin Community Charitable Fund (ACCF) to promote, encourage, and aid in the creation of an innovative ecosystem that supports education, creates quality jobs, and increases the new application of biotechnology, agricultural technology, and food science.
Austin Community Growth Ventures is a 501(c)(3) charitable nonprofit organization.
NETWORK PURPOSE
Start-up companies face many challenges as they move from inception towards full real-world application of their technology. The University of Minnesota Office of Technology Commercialization Venture Center states, “Much like a 3-legged stool, a start-up relies upon ... world-class technology, experienced management, and financial capital.” Young companies lack the cash flows necessary to repay their debts, especially in rural locations. According to statistics from the Center for the Study of Rural America, Federal Reserve Bank of Kansas City, rural counties have approximately 20 percent of all U.S. business establishments but only 1.6 percent of all venture capital investments went to rural firms. ACGV’s intention is to establish capital funds to assist potential high growth businesses, which are the primary innovators and job creators in the U.S. economy. Also, ACGV seeks to support real-world application in biotechnology, agriculture technology, and food science efforts by:
Identifying diversified funding sources;
Coordinating an informal network of angel investors;
Leveraging regional private and nonprofit equity funds; and
Promoting use of State and Federal grants and angel tax credits.
AAA members are interested in investing equity in early stage, fast growth companies that are seeking $50,000 to $1,500,000. Typical investment is in the $100K- $250K range.
The investment priority is for companies that are at an early stage, and have highly scalable business models. Preferred sectors are in food, agriculture, and bio-science, and for companies in any sector located (or considering locating) in the Austin/Mower County, Minnesota area. Typical attributes of a company that would be of interest to the angel network include those with high-growth potential, a national or international customer base, and a completed business plan.
Please note that these are preferred characteristics and investments of varied sectors will be considered.
WHO ARE THE MEMBERS/INVESTORS IN AAA?
Austin Area Angels is a group of active investors looking to invest in early stage businesses primarily in the upper Midwest.
AAA believes that opportunities exist to help grow these early-stage entrepreneurs through a structured, well-managed angel investment process. Our goal is to create value for early stage businesses, so they are ready for the next financial investment while providing the opportunity for a profitable return to the angel investors.
Our members make individual investment decisions. Potential member/investors will collaborate on due diligence and negotiations for each opportunity of interest.
AAA will meet on a regular basis every other month to hear presenting companies. It will seek other angel groups, venture capital firms, entrepreneurial accelerators, and others to collaborate on deal flow, member training, and syndication of investments.
WHAT IF I’M INTERESTED IN ANGEL INVESTING BUT I AM NOT AN ACCREDITED INVESTOR?
Austin Area Angels allows non-accredited professionals that wish to learn about angel investing and are willing to help with tasks like due diligence to join as Associate Members at a reduced rate. The hope is that these associate members will eventually reach accredited investor status and will become full members and active angel investors.
EXPECTATIONS AND REQUIREMENTS OF FULL MEMBERS
Must be an accredited investor, as defined under SEC Rule 501 Regulation D.
Members are expected to attend meetings and participate in screening and due diligence as part of the collaborative process.
Members should have a working understanding or functional experience in one of our preferred sectors and/or business, share our vision, and be willing to actively contribute to our process.
Members should be interested in investing capital and expertise in the upper Midwest.
Our members make individual investment decisions on each deal. On deals members decide to be a part of, minimum investment per deal, per member, is $10,000.
AUSTIN AREA ANGELS MEMBERSHIP CODE OF CONDUCT
I will conduct myself in a professional manner at all times.
I will respect the privacy of other members and not provide their name to any third party without their permission.
I will keep membership information confidential.
I understand and recognize that the meetings and communications are focused on investment pursuits and will not solicit another member for business.
I will disclose to the group any relationship I have or may have with a presenting company, including any personal gain I may receive from the company.
WHAT ARE THE BENEFITS TO MEMBERS?
Greater access to quality investment opportunities (deal flow) both locally and through affiliation with other regional angel groups.
Cost and time efficiencies gained through deal screening, group presentations, shared due-diligence, and cooperative term negotiation processes.
Networking and the ability to co-invest with other local accredited investors with complementary entrepreneurial and industry expertise.
Opportunity to enhance returns and to diversify one’s personal investment portfolio.
The satisfaction that comes from building a successful business from the ground up.
Chance to give back to one’s industry, community, and region.
Opportunity to learn and grow personal investment abilities both informally from other members and through educational programming sponsored by Austin Area Angels.
Opportunities for mentoring entrepreneurs and serving on the boards of companies where one has an investment.
Each member automatically becomes a member of the Angel Capital Association and can access all of its resources and benefits.
WHAT IS THE COST?
In order to provide the best service possible to our members and cover administrative costs, Austin Area Angels must charge an annual membership fee of $250 for Full Membership or $100 for Associate Membership. Below are the 2018 membership fees for other Midwest angel groups.
Plains Angels, Des Moines, IA - $149
Corridor Angels, Cedar Rapids, IA - $299
River Bend Angels, Quad Cities, IA/IL - $1,000
FIN Capital, Des Moines, IA - $1,500
Northern Michigan Angels, Traverse City, MI - $2,000
Central Illinois Angels, Peoria, IL - $2,000
WHAT IS THE INVESTMENT PROCESS?
During the COVID-19 pandemic, AAA will hold meetings solely via Zoom. Post-pandemic, AAA will hold meetings every other month either at the Launch Co-Working Space, 109 1st Ave SE, Suite 4, Austin, Minnesota, 55912, at some other location, and/or online. The meetings will 5:30 to 7:00 pm on the first Wednesday of February, April, June, August, October and December.
A light meal will be served at each meeting when held in person. It is expected that one to three companies will present at each meeting. Additional educational meetings can be offered as well.
Pitch proposals must be submitted at least three weeks prior to each meeting to be considered at that meeting, and a coaching session will be arranged if necessary. A short description of each potential presenter will be provided to each member one week in advance of the meeting.
Meetings will be held to 90 minutes in length. Each presenter will be allowed 10 minutes to present followed by a 10 minute structured question period. Questions concerning financial information of the company or terms of a possible investment will not be allowed. A networking session will follow.
Business presentations will not contain any detailed financial statements of the company, detailed pro forma financial statements (summary information will be allowed), or any pricing or terms of a possible investment. The only document that may be distributed at the meeting by the company is an executive summary, which will be coordinated ahead of time. No offering documents will be distributed to members prior to the presentation or at the time of the meeting. Questions regarding past, current, or future financial condition or investment pricing or terms will not be allowed at the meeting and if asked will not be answered.
Austin Area Angels member names and contact information shall be kept confidential from presenting companies and others. Presenters will not be given the names of those in attendance at the presentation. Instead, each person in attendance will receive an “indication of interest form” to fill out and turn in at the end of the meeting. Those interested in pursuing an investment in a company will coordinate a single contact person to be put in touch with the presenter within a week’s time. After the initial meeting, it will be up to the angels and the business to coordinate meetings, phone calls, etc. Gust will be used for coordinating information between the investors and the company. All due diligence and negotiations will be the responsibility of angel members and not Austin Community Growth Ventures.