From the Introduction

The days when a Horatio Alger could go from rags to riches with nothing but sweat equity, luck, and a good mind for business are gone, probably for good. To survive and thrive, today’s startups need more than hard work and a good idea. They need capital, and lots of it. And for entrepreneurs who have already exhausted the usual early sources of money (family, close friends, personal credit cards), the next resource is outside investors. Yet many entrepreneurs are rejecting the high demands and costly involvement of venture capitalists in favor of a new form of funding: angel investing.

Recent studies show that angels – individual early-stage investors – are the fastest growing sector of investors. In the past 18 months alone, they have poured $30 billion into new businesses, compared with $12 billion from venture capitalists. Business school experts who track investment activity say that business angels currently fund about 60 % of new technology companies seeking 1 million or less in start up capital.. So you see, most every business does need an angel!

Angels are not professional investment bankers or venture capitalists. Many are ordinary citizens who have achieved a level of success in their own profession, which allows them discretionary savings for creative investing. These citizens are the unsung heroes of American business today – the “millionaires next door” who are looking to go the next step. They are the leading source of fuel for the economy’s most vibrant sector – small business and the technological revolution.


Every Business Needs an Angel is the first essential guide to what promises to be the most popular form of investing in the next decade. The book is intended for any entrepreneur looking for an investor, and any investor looking for a new enterprise. It is written by two authors who were involved in angel investing from the start, and who are at the epicenter of one of the fastest growing angel markets in the country. The Washington DC area is now home to far more entrepreneurs and business people than Federal workers, and it has more startup activity than even Silicon Valley, according to several recent reports. The quiet shift from government-based economy to an entrepreneurial one is being repeated everywhere, from Boston to Austin to Baton Rouge. The DC region is just further along than most.

Every Business Needs an Angel offers a blend of compelling stories, sound advice, personal anecdotes, and pearls of wisdom collected over many years of investing experience. On one side of our story are the 300,000 active angels and the 3.4 million estimated millionaires in this country who want to know how to invest creatively; on the other side are the tens of millions of business people and would-be entrepreneurs who are looking for an insider’s edge to get funding.


We have spent the past 15 years advising, managing, and investing in early-stage companies. Cal Simmons became an angel after being a successful owner/operator of a business; John May’s insights and expertise comes from organizing and running small venture capital funds. Together, we’ve been involved in more than 50 private equity transactions. Based on our experiences with both entrepreneurs and investors, and recognizing the need for a practical guide to finding angel capital, we decided to write this book.

We helped create the model for structured angel group investing. By early 2001, we had organized or advised four angel clubs in the Washington DC region managing over $50 million in investable assets, touching 275 investors monthly, and making dozens of investments in early stage companies annually.

One of the angel clubs we founded is called The Dinner Club. This fund is an example of a new generation of angel investing. It is a structured organization of 60 individuals who have each contributed $80,000, creating a $5 million pool to back at least a dozen companies. The group meets monthly to hear pitches from entrepreneurs, does follow-up investigations and makes early-stage investments by majority vote. This group of angel investors served as a sounding board for many of the ideas related in our book. Several of the examples are from actual investments the Dinner Club has pursued, and many of the entrepreneurs quoted received their first exposure to angel investors through this group.

Week after week, month after month, we meet with entrepreneurs out searching for funding. Sometimes they are successful. Often they are not. Frequently the deals we see are good ones, but they are not being presented clearly or they lack a simple key ingredient. We’re constantly amazed at how naïve or just ill prepared many founders of new companies are when it comes to fund raising. Having spent many years advising investors, we have developed a sixth sense for what they are looking for in an “investable deal.” What it takes to convince them to write a check. In this book, we are going to share these secrets with our readers

We will tell you where to find investors, how to prepare your presentation to them, how to evaluate whether they are the right partners for you … and then perhaps most importantly, how to negotiate and structure a deal that is beneficial to both entrepreneur and investor. We’ll even take a stab at explaining how to evaluate opportunities and prepare for a successful exit for both parties.

We will do all these things by sharing with our readers real-life examples of actual early-stage companies and their founders’ efforts to raise outside capital. We’re going to introduce you to entrepreneurs who have gone from launching raw start-ups to leading public companies .. and tell you how they did it. We’ll also show you some who had great ideas, but failed to realize their potential. We’ll examine why it is that some good companies never get funded and others based on the strength of just an idea are able to raise millions of dollars.

Underlying our many examples will be lessons for anyone interested in pursuing this new economy dream … the founding of your own business. We will explain the subtle and not-so-subtle differences between success and failure, and we’ll lay out the steps to help attract money to fledgling enterprises. The end of every chapter includes “angel advice” which summarizes key points.


Our book is organized in a way that allows readers to either jump around to chapters of primary interest or to read straight through from beginning to end . If you’re looking for a good place to start, the following chapter descriptions should help. Feel free to dip into the book anywhere. We hope reading any one section will make you want to know more about the whole journey. Bon Voyage.

In Chapter 1, we relive an entire evening meeting of one of our dinner clubs, meeting nervous presenting entrepreneurs and angel club members of all types . We show what goes through the mind of investors, discuss techniques used by company founders in attracting attention, and provide a window on the decision making process of multiple angels when they pick the lucky winner of the initial dance. If you only read one chapter, we suspect you’ll enjoy and be stimulated by the “dance” seen in this evening’s events.

Chapter 2 is all about relationships. Angel investing varies greatly from bank financing and later stage venture funding in that it is people to people. You get to meet, get to know and bond with the check writer, not just deal with supporters by email and snail mail. Since angel investing is an intensely personal experience, giving both psychic reward as well as possible wealth building, you have to know how to understand human chemistry and how to build lasting partnerships. Go to this chapter now if you are intrigued about what “warm money” means. Be sure not to skip these insights when building your understanding of the entire angel matching phenomenon.

By Chapter 3, you get ready to build the business plan and to execute the strategy to have it financed by angels—and we also offer stories of entrepreneurs who weren’t really ready for angel investing. Why read the whole book or go through the heart wrenching process of business formation if you find in these early chapters that your business concept or your personality won’t appeal to individual investors? Angel Advice here will clearly deal with whether the angel investor world is for you.

For those on the path in search of company funding, we launch Chapter 4’s guidance clearly at finding the right partner. Did you know that there was such a thing as bad money? Angels from Hell? No matter how great your idea or high your hopes, you could be dashed if you find the wrong partner. We know you want specific, detailed “how to’s” by this stage of the learning curve on how every business needs an angel. Chapter 5 is all about who angels are in today’s market, how they are developing sophisticated structured groups in every community in the nation, and how to present to them. The presentation process is as important as your company’s product or service, so learn how to prepare your elevator speech, and what are the key dos and don’ts on presentations. If you have only eight minutes to convince an angel, could you do it?

Let’s make a deal! Chapter 6 offers checklists of information you’ll have to provide to angel prospects to get their confidence and see examples of term sheets (which are offers of funding). But remember, you are dealing with angels of all types , and one may well work out just in time for you. What types of business plans work with which types of angels? How will you value your company? Also, without some guidance with professionals – like lawyers and CPAs –you’ll possibly have a sadder but wiser story to tell, so learn here how to deal with the financial closing process. And what a feeling when you see that check from the investors at the closing at your attorney’s offices!

Once an angel relationship is begun, there is so much more than money to talk about. Chapter 7 offers tips on how to live with your financing partner in a mutually beneficial way. If this is your key area of concern, jump to it first, then come back for the stories and insights about the entire life cycle of entrepreneurs and angels in the rest of our chapters. There are suggestions for getting better advice from your angels and outside advisors and what to do if the relationship hits a rocky patch. Having individual investor partners is like a marriage, so be prepared.

Finally, we provide stories about how the end of the angel experience can benefit entrepreneurs as well as funders. Chapter 8 is all about the five typical exits angels develop. Find out why acquisitions are the most likely way entrepreneurs and angels cash out – and what to watch out for in the deal. Angels and venture investors do need an exit, a way to get their money and –hopefully-profits back out. The whole reason we present this book to you is to understand the entire life cycle of an encounter with an angel – not only determining if angels are for you but also learning how to eventually separate and have a mutually beneficial exit.


We enjoy the entire business formation and growth process, the human drama, the stimulation of creativity and tension, and the high that comes when wild successes occur. Group dynamics of bands of angles heighten our experience and have led to many of the stories and learnings we share in this book. Each dance between entrepreneur and investor is unique – we look forward to hearing from many of you about your experiences and may each of you aspiring company founders grow to become angels in your own right and continue the evolution that we have experienced!!

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