00:00:00 moving the Neto unfound your failure one conversation at a time I'm your host Justin Gordon and welcome to startup 2.0 by spark XYZ join us each week as we give you access to some of the top investors and entrepreneurs in the country to help you think through and overcome the top challenges that startups face today's guest is Brian Horner president of the tech Coast angels la chapter he's also an angel investor and a board adviser to several seed stage companies in Los Angeles Brian welcome to the show

00:00:36 thank you so with tech Coast angels what I want to start with is what areas are do you invest in are you focused on let's just start with that yeah so we're an angel group 400 members and each member really has our own focus group so we're agnostic but true agnostic you talk to a lot of you seasoned they say they're agnostic and they you know what we don't do front to your tech or we don't do medical we do everything we go into biotech frontier tech hardware you know so we touch all points and it

00:01:04 really is dependent on you know what angel investor likes what their background is what their interests are so we really we see the gamut yeah kind of all over the place yeah yeah and then as an angel group too like how is that check sighs I where's the range on that how does that work for you guys then so it's very different in angel groups because again it's it's individual people making the decision so we have invested each year we invest about twelve to fifteen million dollars between all of our members about 400m

00:01:30 byrsa ghin and it's between 40 50 companies so the average tech size is 300 but the the variability of the standard deviation is really wide yeah we've had some companies where 30 investors have come on and it's raised several million dollars and then every now and again will be one investor likes it a lot and where it's one check for 25 grand yeah so the spread is really wide and it really depends on you know which investor yeah and these mentions like 48 50 companies per year yeah yeah we I kind of looked at the averages and some

00:02:00 some years more some years less we actually this year is gonna be a banner year we just launched a sidecar fund so normally we invest about you know fifteen million dollars like I said but we've already surpassed that in the first half of last year Wow so we've moved away from the individual checks we're still doing that check but we actually have a sidecar fund that can add an additional hundred of 500 grand depending on you know how did the company is or how much we like it yeah um so so yeah and like Chuck size has

00:02:30 gone off yeah and in which you said obvious like four hundred different members of yeah yeah there's five chapters I'm from LA to San Diego the main chapters are LA San Diego and Orange County okay and yeah each each you know chapter operates differently companies apply to the chapter and if someone in San Diego gets an investment for instance they'll usually do a road show to the other chapters and say hey we're invested here we've done the due diligence here's the packet it's all kind of bundled up for you okay so we

00:02:56 share deals a lot yeah and that's kind of how the check size is kind of increase yeah you mentioned too with the due diligence process and how does that work across all the angels like where does that process look like for you guys so the whole process for a company coming in is you know they apply they do a quick pre-screening where a few angels will just look at it and say oh I think I think this is something members would like this is kind of a poor Ally it's got the you know it's launched it kind

00:03:21 of fits our minimum criteria and then they'll come in and pitch live to a group of you know 40 to 50 people in the room and we meet twice a month okay and then within that after that the angels will circle up and say you know who like this who wants to follow up and then anywhere from 1 to 20 people will then follow up next week do more of a deeper dive our long and then I'm kind of break off and do their own do that due diligence so usually it takes about 30 days to get from like you when you pitch

00:03:49 to get a check yeah and then once one chapter kind of invests then they'll sit they'll go to other chapters and say and say hey look we're we're investing you know 300 grand in this chapter we'd like to race a full round so la you take a look at it or San Diego where you take a look at it and hopefully we can fill out the whole round yeah and obviously some venture capital firms are gonna have a new mystery angel that will have investment thesis that type of thing how does that work with tech Coast angels

00:04:13 that in terms of that yeah it's really dependent on the burden on each individual investor like I own thesis I'm pretty agnostic I stay away from frontier tech and biotech just cuz I don't get it and I don't like to just completely rely on someone else for their opinion when I'm making my decisions but there are a lot we have a lot of doctors that are kind of in the space that know the space it can make you know informed decisions so our life sciences it was actually fifty percent of our portfolio last year was

00:04:37 life science its investments cuz you know we do have some expertise in that area yeah and then with that too I was having so many different members like Howard u mentions kind of shared from one kind of chapter we'll share with another chat right how is that flow back and forth between deals and you know that this might be a better deal for them based in there now how does that go with TECO's angels yes so we'll never really send a deal for like if someone comes in to LA in the life sciences space we'll look at it first yeah I like

00:05:02 it and if if there are some interested members will then send it down to San Diego and say hey you guys should take a look as there are a lot more physicians down there but but you know the beauty of our chapter is we kind of all know one another we know where the industry experts are so from time to time we'll say hey you know Don will you take a look at this I know you have a background and you know a cardiologist this is kind of a heart yeah this I'm in the energy space so if you see anything

00:05:26 in the energy space all I get a call and say Orange County is looking at this what do you think about you know distillate you know trading and I was you know yeah and then with that student with that due diligence process I what helps companies stand our where are some things that they have where you see a company you're like okay we definitely need to take a look or take a deeper dive in that were for you guys where are some of those things so I mean everyone's gonna say it but the team is like where it starts and finishes at

00:05:50 least for me yeah because we are so early-stage it is so incumbent that you're really investing in a person not and not the idea or the product because there's so many pivots you know when you're starting out of business it's gonna change so many ways one of my best investments is pivoted twice now to almost completely different so you're really investing in someone that is competent enough to see kind of free to tea leaves and change you know the business so you're kind of you're saying I'm besting you your business other

00:06:20 things we look at it's just like sizable market opportunity like there is like a big idea out there and like there's a way to kind of capture the market like and it in a real way yeah we also look at moat and and barriers to entry defensibility yeah that doesn't mean you need a patent on your idea but there has to be something that says okay if another entry comes the entrant comes in you have an advantage over them be it you know your 10 years experience in the space or you've already kind of made

00:06:50 some real progress in you know customers or key you know key contacts in the industry things like that yeah and then with that too is I talking to founders talking these teams obviously it's so important you're betting on them not necessarily the idea what are some of those questions where are some of those like actual things you would ask that you would ask them like okay we want to know XO anything and maybe it's different across all of them but if anything you can think of that would be helpful in that way well I mean I found

00:07:16 a really SF passion about the idea I would much rather have someone with a background in the space that knows it then someone that just kind of went through and said oh this isn't interesting I want to get mechanicus now so it's really kind of having an expertise telling a story telling why you're different than another entrepreneur that's probably doing the same thing what else can I tell entrepreneurs I mean really it comes down to this like honesty and letting us feel that you're kind of being straight

00:07:44 with us yeah I think we've seen enough deals that we can tell when someone's kind of you know biessing us yeah a little bit so you know some of the best deals have been companies have come forward said look I don't know the space I think there's an area you know but I'm gonna I'm gonna try it and the checks come out but we're like I know this I know that you know it's a little bit harder to kind of believe that so humility is big for a founder yeah in my opinion yeah yeah a long way I think someone else we interviewed mentioned

00:08:09 that same type of thing I merely and being authentic with their story and everything and other things that for you guys are like you're pretty much gonna say no to or things that I red flags in the process if you're going through I mean dishonesty is kind of another one yeah another big red flag is just not understanding your competition and if there's something that I can kind of find in two minutes of kind of diving into it that you haven't mentioned it sort of raised the fire what else is what else are you kind of hiding right

00:08:37 but yeah I mean that's that's kind of the first red flags yeah there's no like you know obviously there's other things that we'll get to know but the ones that are like you know instant no it was kind of a character you know flaw or something yeah and then through that process you're sounding a little bit deeper with how has that kind of change as you've gone along maybe the last few years into this like how does that change in terms of that process as that process kind of stayed similar has it

00:09:02 evolved in some degree I'm just curious about your process you take yeah it's you see well we have been we've done faster because we just kind of you know look to the market and kind of follow their signaling yeah you know this this is a 20 year old group and for I don't know probably the first ten years we were the only real check in town so we had sort of the power to kind of do whatever we wanted in the sense of taking as much time as we needed you know and things like that now it's come it's gotten competitive deals got a

00:09:35 competitive valuations have gone up and people will get multiple offers from multiple places it's a great time to be an entrepreneur best time it's more money yeah there's a lot of money floating out there chasing deals so we've gotten faster we've been you know I have been since I started you know that's kind of been my primary drivers really getting to know faster yeah you know getting to yes obviously but I've heard that the second best word Dinajpur hears no yeah because they want to move on and I'm I am respective that I'm

00:10:03 hypersensitive to that so I want to get to a decision as quickly as possible to let them move on and use their time accordingly you know one of the one of the things that I've found in our company companies have I've invested in they lose a lot of time a lot of traction when they're going to raise their a round and you kind of see you know these these metrics flatline like what happened well raising around for four months right because I thought I had this deal and they kind of you know pulled it the last minute so

00:10:29 I'm very respective of that and I think you know that's something that the entrepreneur community's very small it's very tight-knit and it starts to get out there if people are you know not being honest or taking too long or whatever so it's just really a matter of kind of you know cracking the whip on our investors to say look make a decision yeah you know you said you were going to call this person for an opinion do it now don't wait wait you know what I'm right and that just that just you know comes

00:10:55 down to you know being really disciplined and kind of you know making it a focus of your priorities yeah yeah an especially thinking just long-term right having that reputation that you guys do make decisions you don't like Oh give him a maybe I've heard that too it you give entrepreneurs these maybes and they're like okay well I can't do much with that we give them oh no okay they can move on to someone else yeah that is like a West Coast versus a East Coast mentality from East Coast and we're very direct and you know I think

00:11:24 it's a little bit different out yeah people don't like to hurt other people's feelings at all yeah it might be that but and it is hard to say no to someone you know it's art because a lot of the time it's face to face and it's very hard hard to do that so we've kind of gotten away from that but I think people appreciate that directness yeah and in my right there's probably a piece of that sewer you don't want to miss out on something obviously so you're like you maybe keep the door open by doing that

00:11:47 or is there any of that type of feeling - I mean there might be that you might be right yeah there might be [Music] yeah and there's so there's so much to that and then so you mentioned can't there's really certain things look for that obviously in these founders there's some things that are clear like know within this is there anything else in that due diligence process that you mentioned being faster about that like that helps you become faster at making these decisions or evaluating it quicker

00:12:18 or anything that come has helped you through that what do you mean it's like you said as there's been more money out there the landscape is changing then how have you evolved to make sure you do make faster decisions it's just yeah you know I mean how big evolution is this fun that we've raised yeah you know we wanted to be able to write bigger checks and we write them faster so yeah the fun that we have can make a decision very quickly is helpful yeah and you know it's kind of the one major reason is to

00:12:45 the launching of fund is to let us like let entrepreneurs know that like yeah we have this you know additional cash of you know money that can that we can kind of tap into yeah yeah and then with tech Coast angels to looking at these entrepreneurs that you're working with are you pretty hands-on hands off it case-by-case basis like how does that kind of typically go with I'm hands-on unless I can actually help I like to stay out of entrepreneurs hair and I think you know there is a bit of too many cooks in the kitchen I think so we

00:13:15 are very I am at least cognizant of yeah you know the entrepreneurs time and and if I can't be of help I don't want to stick my nose and again I'm investing in you know the jockey I'm investing yeah I want trying to be making decisions yeah well yeah with my money so that comes down to you know why we we evaluate the the person and there have been a lot of deals that we've seen that we're like this is a great opportunity yeah but I you know I don't know if this is the person that can execute it unfortunately

00:13:41 but I don't I can't count on you know one of us stepping in or something like that yeah and I also don't I don't want to be that direct and say you know that that just feels kind of wrong to me to say I can do this better or you know or someone on our team can do this better or so we don't you know I I tend to just kind of be a little bit more hands-off but if I can make connections I will like one of our deals I was looking for real estate connections and I have a few people just from UCLA in the real estate

00:14:09 space and I was able to set them up some pretty good you know contracts here in LA so you know that that's one instance where you know we can be helpful and that that's kind of another reason why we started the fund was because we wanted to activate a lot of our inactive members we have you know again a hundred people in LA that have twenty thirty forty years experience yeah and just invaluable rolodexes when they're not invested in the deal it's really hard to say hey can you open up your contacts

00:14:39 even though there's no person about it because it's not something you can tap into indefinitely right it's alright endless well it's like yeah I can only ask this guy for so many favors right yeah so what we want to do with the fund isn't gonna say look you're kind of invested in this already so this is this proves you is the helping yeah monetarily if you kind of helped us out so that's that's kind of another major reasons we wanted to kind of tap into this network and in my opinion that kind of makes us that's kind of our most

00:15:05 powerful asset as these contacts that we haven't so many people but it hasn't really been utilized so this is kind of one way like you know uncapped at potential yeah and just looking forming an outside perspective and like looking on their adventure capital firms there tend to be pretty small right within terms of how many people are actually and they're necessarily so you have four hundred members or cuz there's a lot of networks of networks that works which seems like such a huge value add for someone

00:15:27 working with tech Los Angeles's that have that network as they can get context whatever they need depending on their business yeah so yeah it seems like a huge thing there and I was as you've worked with different founders all these different companies what have you seen as some of the biggest challenges they face these founders these entrepreneurs and have you helped them through that I mean it's the challenges are different at every phase so phase one it's really forecasting not understanding that your it's not gonna

00:15:54 be a hockey stick you know it's gonna be it's gonna it's gonna be kind of incremental growth and are you budgeting accordingly for that do you have as your target you know investment raised enough to get you to some pivot point where you're now gonna be attractive to a series a investor or are you gonna run on money you just have to go back to seed again and now you're kind of deluding yourself a little bit too much and then as you kind of go further you get more into re they got a check another spending to this is thank you

00:16:22 much too quickly you know I there was a company that when I first met them they were working a remain nameless they were working out of a house that was in like demo permit mode so the they were trying to demolish house they had like you know five to six months until the demo program went through like we might as well rent this to someone so they had this house working out there they got they got a pretty big check size and then the next thing you know they're on Venice waterfront they have a twenty six

00:16:50 person office there's five members there and it's like you know cushy cooking of real estate Hearst and I'm like what is why do you need this big Oh will grow into it this is like you know and I've heard that from other be ceases like that you know they want to you want to say budget-conscious as long as possible so you know it's a good problem to have that much money but yeah yeah and then you get into more of the you know the problems with like personnel and I haven't really seen any because we're

00:17:18 lucky were early-stage we haven't got you know the teens have not been together too long there's not a lot of money on the table and really it's not that time on the table so if it's not working out there's usually a clean break so it but it's a lot easier to leave you know ten percent of a two million dollar company than 10 percent of a two hundred million dollar company where you can put in five years of your time versus five months yeah so we haven't really seen any of that yet luckily yeah but yeah I mean the early

00:17:45 stages really it's just like knowing your market milliard competition and know like it's gonna take a long time to get there yeah any obviously you said you're pretty hands-off for the most part like that when they when these entrepreneurs and founders when they are struggling with growing a business are they coming to you typically like right away how those relationships go like every entrepreneur should and most that I know do send out sort of quarterly or monthly updates and say here's what we're doing and here's my asks yeah you

00:18:13 know do you have a Denis anyone in the you know shoe or space you could talk do you have any contacts in manufacturing in China does anyone and as you're building kind of you know your network just keep you know keep an email chain there's a lot of companies I passed on that keep updating me you know every three months and I said oh you know I actually know someone and I'll just reach out and say hey you should talk to this person so I would say really keep that network kind of I don't know energized or in like up-to-date with

00:18:45 where you are yeah because there are a lot of you know contacts out there and you'd be surprised as like as how you do is that be kind of my biggest piece of advice is to kind of you know reaching out to people and asking for help yeah and then with the tech Los Angeles stuff two different shappers obviously there's different people in each one like how often are you meeting with in your chapter and like going over things and how does that work with tech Coast angels we meet twice a month okay I mean

00:19:09 we usually screen between three and four companies the companies that come in apply and then they're kind of they do go through like a little pre-screening sort of you know committee looks at them because we again we don't want to waste people's time yeah because you know is valuable so what we want to we want to make sure that the companies that are coming in have the best chance of funding so that you know every we'll find three or four companies if you think this has a high likelihood of getting funded

00:19:35 I'll come screen live and then we'll kind of start the due diligence process but yeah it's twice a month we need and now we'll take a quick break and hear from our sponsor Breck's a big heartfelt thank you to Breck's who is out there support this show would not be possible we've seen firsthand the difficulties accessing basic corporate credit without providing a security deposit or personal guarantee early on as companies grow managing expenses has become more difficult and time-consuming which is why we've partnered with

00:20:02 Breck's to offer a corporate credit card that is not personally guaranteed offers higher credit limits provides Auto reconciliation and integrates with ERPs using receipt capture Breck's is the credit card let's start ecosystem and we highly encourage you to check them out and back to the show so as you're evaluating different deals and stuff obviously looking at different industries you mentioned like all across this different spaces with tech Coast angels what are you most excited about coming up now our industry's coming up

00:20:32 now so you know I really like the Evie space so I'm looking at anything from like battery infrastructure anything that's kind of in that in line with that I think there's gonna be a lot of uptick there I don't see that you know changing anytime soon you know things that I'm not seeing yet I really want to see more eldercare I want to see more communities for elders focus I think I think more and more you know older people are getting a little bit more tech-savvy and and before they were just kind of

00:21:02 ignored but I think there is an opportunity there that's that's kind of you know security I think it's a big thing I am you know I'm all for a Big Brother I'm fine with security cameras everywhere but you know I I think that we're gonna kind of you know in the next kind of recession there's gonna be a security issue and we're gonna need a little bit more so something-something in that space yeah yeah so you're okay with the data being in their hands as long as it keeps everyone safe I couldn't care less yes yeah I

00:21:34 just I don't understand like what no one cares like what Chad you're looking at like and so so so now you're seeing ads for something like a shirt that you actually might want to buy that's a crew versus like Metamucil so like this is the beauty of Facebook and Google as they can splice up this time and make it you know make ads the ad space you know work for everyone right and and and more I don't know look focused but and this is kind of why you're seeing so many startups right now it's not that there's this you know

00:22:10 giant amount of Flush capital and we're at this bubble it's that it's so much cheaper to advertise it's so much cheaper to get your customers nowadays yeah because you know the billboard out there costs the same amount of money but if that billboard could be seen by only 30 year olds you know 30 year old males that are in a soccer and it would change you know you could splice that up in many different ways and be a lot cheaper right sure so and that's kind of what Facebook and Google do so I'm fine with

00:22:36 that I don't mind targeted ads I don't know I'm fine I understand that I'm probably purchasing more things that I don't need yeah but yeah I mean it's one of those things where it's it's then relevant to you once you want to see you're gonna see him anyway so you can't see ads regardless and if they're personalized relevant to you then it's like okay I I'm okay with the same thing especially coming from marketing background you see why it's useful and they're like okay well I don't want the wrong and I'm like

00:23:01 this is a waste of my dear so I can see where it's fine and I see that I see the creepiness cuz you'll search something and then you'll start seeing the ads for it yes a something I mean people say like a food thing right yes wait check your phone yeah yeah but I don't know I just I don't see it as creepy I just think it's like interesting and smart like yeah they've like figured this out so I don't know make it easier for everyone around but you mentioned the senior care thing too though like what do you see as

00:23:27 opportunities within died so they're gonna be opportunities within that but I'm if you saw different startups maybe in that space or what types of things within that industry you think that okay I just I think there's a lot of loneliness in in in older people I think there's a lot of isolation and I would like to see less of that you know I know you know males tend to die faster than females a lot of you know older single females out there looking for friends looking for things to do and they can't do there's not like a meet up

00:23:56 or there you know they try meet up but no one's looking at it so I think you know I don't know how to get get tap into that market or make it a little bit easier I know you know seniors are a lot more on their mobiles now so maybe more of a mobile base than a web base it's kind of what we've seen so far is just web-based stuff but they'll get it you know there's that is an untapped market I think for for something and it's it's a it's a pain point you know yeah I think I think people would appreciate it

00:24:22 think it's you know you see all these you know you go to tech disrupt and everyone's trying to make the world better place and they're making the world a better place I have this new camera it's gonna make the world a better place but this what I actually make people happy you know and I'd like to I'd like to see that song yeah which is what would be great yeah and then this just what the electric vehicles to like anything else in there like particular you said the batteries you think Justin more opportunities in

00:24:43 there like what are you yeah I mean you know battery technology needs to improve you know the the the in the highway we don't have charging stations everywhere their needs for that but like cars talking to one another making you know accidents you know obsolete hopefully you know solving for traffic you know this is we're going there yeah it's just a matter of who's gonna be you know be pushing that right who's gonna actually take us there then from that point I was looking at like startups and different

00:25:14 opportunities for them how do you see like the venture world angel investing all of that kind of evolving or where have you seen that going recently and like any opportunities they're like how it's gonna change your business for protect those angels as well we've had massive evolution in the last ten years you know and and really the last four four to five years it's really picked up and it's kind of twofold one is obviously crowdfunding it's it's democratized sort of access to these markets but really it's it's the you

00:25:45 know it's affect a lot more people are falling into the accredited you know definition you know this yeah this this investor for those that don't know that only really allowed to pitch to accredited investors are given a million dollars of capital or 200 grand in income that definition was set I think it was like 1983 sometime in the early 80s but it hasn't changed so that you know when it was said it was like oh this is like 1% of the population now it's like 10 to 12% of the population fall in that in that bucket so there's a

00:26:17 lot more people that have access to this so you have that alongside with you know an increasing amount of you know start like crowdfunding campaigns yeah friends and family round scenes it's like a little bit less you know there's there's more people doing that now so that's definitely raising the valuations on the top and put but can consequently what we're seeing now is the back end is getting compressed yeah I think that you know Wall Street is sort of pushing back and saying we can make up our own mine

00:26:50 and they're not gonna take the valuation it's that Sandhill throws at them and you have you know they're thinking for themselves and this this wework IPO you know and and what's happening what's gonna happen with Softbank I think is gonna be a real pivot point in in the VC community so I think that you know there's not that much there's not gonna be as much money to be made in VC for a short period of time yeah or it's not gonna be as easy you know there's still it's not easy as it is sure but you know there's always

00:27:23 gonna be winners be picked but even you know you even look kind of the the okay ones are gonna be compressed a little bit more instead of like a 6x or 8x you're gonna have a 2x maybe yeah I don't you know that's kind of my yeah and someone someone mentioned recently to I think they're guessing this show was saying like going more towards profit versus always strictly just growth without showing any profit you what do you think about that what do you think it's it's really hard because all these industries are such land grabs and

00:27:53 yeah and I you know I understand the argument for build a business build a profitable business and that's that's really a family business and that's not really you know something that venture capitalists once they want they want growth they want they want to see an exit they want you to grab a lot of market and then someone else bought you because you have this market share yeah so it's not you know there there are a lot of companies that come to market that are not profitable in their life this is crazy but if you look at

00:28:22 Amazon I mean they haven't they weren't profitable for 15 years right it as public is publicly traded company yeah but look at them now so I think there is still an opportunity to grab line and to reinvest in yourself reinvest in your company you know the I understand you know go into profit and and and and kind of you know doing it more organically and slowly but that's not something that a a venture capitalist is is interested in because they're really constrained by their their investors their funds that

00:28:53 you have to return your money in eight to ten years right so yeah they're not interested in you kind of slowly growing they want you know they want everyone charging the line and and getting as much growth as you can in that you know five six seven years until you go to sell yeah difficult to see how that would change you know yes they need those returns mm-hmm I mean so yeah to make it fun to work just look at the dynamics of a fund and even angel investors are constrained but that but they're still kind of looking for that

00:29:19 because they're like if I want you know profits of invest in real estate all invest in yeah in you know in stocks or you know I mean any other sort of one's a safe but safer investment yeah this is kind of carved out as an alternative asset and you know you kind of say alright this money I could lose but if it's a homerun it's gonna you know it's gonna do something for me yeah I'm willing to take that risk for that chance yeah I mean that's you that's what you sign up for is you sign up for those outside gains because that can

00:29:45 actually change you know your lifestyle yeah you know a 5% dividend is not gonna change one's lifestyle right it's not gonna yeah not much of a sale but that said you know that it's important because I think a lot of entrepreneurs are looking you know that they might have a business it's better suited for a family businesses and if you drive down from here to San Diego you see just mansion after mansion if mansion these are not all ceos of you know tesla these are these are you know pizza chains or like yeah well very

00:30:16 small you know you're making 200 grand a year on this very you know specific neighborhood business maybe and you can have a great living doing that I think we just you know and this this kinda comes back the you know the we're looking at CEOs or new celebrities now yeah so everyone you know all these you know the the the it's like opposite ends are the same barbell as like people in you know Intelligencia or like writing their scripts are writing their business plans they're both looking for fame

00:30:45 really and writing I think that's you know that's that's that's a great driver it's a great motivator but if you're running a business maybe you should step back and say what am I doing this for and is this better suited for just sort of slow growth you know family business yeah and there's obviously like you said nothing wrong with that but and there's also a very small part that entre entrepreneur population that is gonna venture venture bet venture financing to accelerate their business that it's the

00:31:11 right fit even for venture like everyone's not the right fit for venture I remember hearing the story of us this company that's like I think it's cookie on-demand delivery service like one day and it was a great business profitable everything and I'm gonna quote end up closing is profitable but it was never supposed to be a venture but a business they tried to do it just didn't work out so if you'd like to think about that in the model itself and knowing that there obviously are companies that are looking

00:31:33 for venture financing we've kind of talked about your thoughts on how you approach companies but what should those founders those those entrepreneurs be looking for in an angel investor and any investor in their company what's they be looking for so early stage you're gonna be going to friends and family you know a lot of the VCS that started as precede ideas have kind of moved up the chain a little bit yeah and one is partially de-risking but two is they just started raising bigger bigger funds and you just

00:32:05 can't fill eighty million dollar fund with two hundred thousand dollar checks so you're really sort of getting back to sort of the friends and family and like you know traditional angel investors and what I would say to you know early-stage entrepreneurs that is really ask questions and say what have you invested in before because there are a lot of you know people out there that aren't real investors are kind of just looking and not really so before you waste your time and doing all these due diligence to the calls is it's

00:32:35 a what have you invested in before I talk to a lot of entrepreneurs that they get really frustrated in the race process because they've just gone on all these calls and you know and and in meetings and and there just was never any you know light at the end of the tunnel even if it was the perfect pitch or the perfect idea so so I would say you know the first two questions to be what have you invested him you know and and that that can be kind of a filtering mechanism yeah what about what will be next to where

00:32:58 some other ones potential that you think they may may be valuable for them to ask these these investors well what you know besides what have you doesn't how have you helped the companies you have what yeah what what connections have you made for them give me an example of you know what you know an intro you've made for them or you know staff member that you've kind of introduced them to or some way to add value to the business yeah I will say though you know in the early stage that's a luxury you know

00:33:25 they're burning you should get as a check yeah but you know if you have the luxury if you're 1% of these startups in his luxury of having so many checks you don't know to do it then you can start really sort of you know interviewing them but I wouldn't go in with those kind of questions because it might turn off some people yeah yeah yeah first thing get the money yeah and then go from there as it goes and for you like why did you get into angel investing in the first place well I got in because I

00:33:51 wanted that sort of alternative asset class you know I had real estate stocks and I was like oh I'd like to kind of diversify a little bit and you know have access to some sort of home run potential so I joined TCA to kind of because I didn't I've never been an angel investor before I know a little bit of about VC through business school but the more I sort of learned I really you know got hooked on it and you know when I was in business school my favorite courses were you know venture capital you know business plan

00:34:19 development anything in the entrepreneurial sort of track and I kind of went back to that I just really liked it so I once I joined TC I just kind of made it almost like a full-time job I'm even though do that before kind of get you know is up the curb as quickly as possible and really kind of you know you know put myself in the community and and kind of get myself out there and and try to better TC and get better deals and you know be a better investor yeah and why did you angel investing how did you say the point where you decide

00:34:48 to join TCA versus to come back on your own or someone else so how did you get to that point of well yeah I mean it was easy for me so one I had no access to deals yeah I didn't even know how to go about finding and I mean you could go to some events but how do you even you know to is I wanted a group of a hundred people that were smarter than me around made helped helping me at the decision-making process remember the first TCA meeting I went to there are four companies had pitched and I was like I didn't bring enough checks

00:35:15 they're all they all sounded great they're like where you know where yeah I don't have enough money here so but they're like no no just wait like six months you know you'll start to see you know what we know what's good what's bad what what to look for so I did like make it more of an educational process and so so that was the other thing in two and three is just access to the CEO to ask actual questions you know if I'm writing a $25,000 check that's not really gonna make a dent and the CEO you know is

00:35:40 raised so it's not really worth their time to sit down with me and ask you know answer due diligence questions but from the room with 10 20 people and we're all of a sudden gonna write $500,000 with the money now we have access to CEO we can ask questions we also have access to kind of you know down the road if we want to you know if they're coming to us for help sure and kind of improve the company in any way so it sort of magnifies sort of the power of your money yeah yeah and then what's that - like how much time are you

00:36:10 spending on the on with TCA in general you say you have two meetings obviously per month but how much time you're spending how does it kind of look in terms yes so I'll be taking over as president next year so um I was vice president this year I probably spend I don't know 5 to 10 hours a week and a lot more sometimes like we're raised we just we were raising this fundraiser yeah I'm spearheading so the last three months have just been like trying to put this all together from like the fund accounting and the legal

00:36:35 and so that's been a lot of work but but yeah I mean it's as much time as you want to put into it I actually like doing this yeah you know I like before that's amazing yeah I like doing awesome and I have to ask them with raising the fund like how's that process gone for you was that been like for you obviously you haven't done it before right no and it's an internal race I'm not going out to LPS yeah road show any different right it's all internal sure the fun is all you know is is restricted to only TCA members yeah

00:37:07 so it's been good I mean you know a lot of people get it you know they understand that it's gonna prove TCS deal flow they understand it's good for them as an investor to have diversification because really these are home runs or strikeouts so you need to have as many you know companies in kind of a portfolio to get a real diversified return and to get dan history average and then also just kind of you know they get the the idea that this will help TCA like activating members maybe getting more members in it's it's just like all

00:37:38 pop Phillipe yeah that's the thought process at least and how did you get to that point of like figuring out how much you want to raise or target for raising how does that go yeah it wasn't really you know we didn't have a monetary target on it we you know we obviously wanted to cover the cost of the fun to make it economical of course for investors which we've done but and we wanted to make it enough that it would you know help entrepreneurs in the seed stage it was like it would actually make

00:38:03 a difference like you know an extra hundred 200 grand is gonna make a difference you know and around that early stage so that was kind of where we started as the target but really I just wanted as much participation as possible I didn't really care about the net total but the the number of investors was more important to me because that that I feel like there's more auxilary benefits of having more people in the fund yeah and with you too you mentioned I you actually enjoyed this like yeah what is it about working

00:38:27 with TCA like that you like so much and you enjoy so much that maybe it's been different from other things you've done so I was you know I was like more like the assembly line Ford worker I was trading electricity futures you know PJM East Coast electricity I know everything's an asset like really local markets but it was really hyper focus it was the same thing day in and day out yeah and I was a bit like you know Sisyphus like pushing you know the P&L up the ladder and then it resets is your everything but but this

00:38:57 no it's more of like a bit of like a consulting role where every day is new every day is different every company is different I'm learning about you know every company that comes in I have to kind of educate myself on that industry very you know very briefly yeah so I find it like you know intellectually satisfying and and you know really rewarding in that respect I like working with boundaries also I'm like adjunct faculty at TCA yeah so I help I'm kind of running there or helping with their bco business creation option course okay

00:39:27 so I do that you know for two semesters a year and I just like working with young founders and and and hearing ideas and trying to you know help them out it's just it's it's a it's you know very satisfying kind of day-to-day yeah and not to be negative but what are the challenges or what maybe did not so as fun things for you and within this as well yeah I mean you know when I when I started taking over or like being the VP role there was just a little bit more stuff that had to be done versus like I

00:39:56 wanted to do it true so you know there's there's that but you know the you know someone has to grease the wheels I mean that's sound like a fun thing to do leave that yeah which is amazing is there anything else you'd mentioned two founders start you know start trying to launch and grow their businesses that would be helpful for them to know from your experience uh yeah I would say go to as many events as you can in LA I mean there is no excuse not to be out at all these events like you know lava so

00:40:25 Caltech there's you know most universities have calendars you can find events all over the place and then once you start signing up for some it store you know it snowballs into others and there's one or two events every single night in LA there's some debt you can network with other people entrepreneurs VCS so really just getting yourself out there and getting the community and talking to people is probably the most helpful for a very early stage entrepreneur to kind of you know educate themselves yeah yeah and then for you

00:40:54 personally and what's been most helpful just in terms of like as you're growing in terms of this angel investing thing like wasn't most Hubble for you yeah I mean the most helpful thing for me was just sitting around a room of you know 4050 much more intelligent people than I am and you know understanding how they make decisions why they make decisions seeing what companies work with don't there's you know with with this isn't you know like with you buy a stock and you have an instant feedback of whether it's up

00:41:21 or down yeah I come from an equities background so like so when you see that you know you know if you're doing right or wrong yeah and most mostly in life you get kind of this instant feedback the feedback loop on angel investment is so long yeah that you really need to count on other people to say like this is what I've seen that's doing it right because you don't have that instant feedback so I'm hoping that deals that I'm invested in are doing well but I'm confident that they are because I have

00:41:47 made you know educated decisions and you know and yeah gotten in kind of and followed kind of some smart people yeah right you should try and do all the right things and you're kind of waiting to see if they pan out eventually you know I mean there's only so much you can do what is the easiest way for people to reach out to you connect with you yeah so so we have a website tech Coast angels go on there there's an entrepreneurs tab it'll say you know what we look for where your state should be and then you know apply online you

00:42:16 you'll see probably members TCR all these events ya know Santa Monica Hollywood you know there's there's probably a TC member at a lot of these events you can just chat with them and say hey what's the process like but yeah I mean it's it's you know apply online five questions and then you know go from there awesome Brian thank you so much for coming the show thanks for uh me thanks for checking out step 2.0 from spark XYZ if you want to learn more about startups and investing and check us out join the

00:42:43 ecosystem at spark XYZ dot IO