The crop of companies presenting to investors at this years’ Angel Capital Summit are truly outstanding. Some people may believe that these awesome companies just fall into our lap, ready to pitch and raise capital, but nothing could be farther from the truth. The selection process for the Angel Capital Summit is rigorous and the preparation companies go through is even tougher.
Rockies Venture Club is a community of angel investors, venture capital companies, entrepreneurs and others that receives hundreds of applications to pitch throughout the year and even more inquiries that come in via phone, email, and social media. We encourage some of these companies to move on, while others we direct towards a well paying day job. Filling the pipeline with quality companies involves getting to know the gatekeepers; the attorneys, CPAs, entrepreneur organization leaders, bankers and more. It involves getting out and speaking at events, writing and publishing. And most of all, it seems to involve drinking a lot of coffee and meeting entrepreneurs face to face.
Once a company comes into the application process, it is screened for suitability as a “venture deal”. If it’s too early, too small, not scalable, or simply displays a lack of sophistication needed for success, then it moves to the “inactive” folder. Companies that proceed are analyzed based on their team, product, market, marketing strategy, scalability, proforma financials, competitive advantage and exit strategy. If all of those things are strong, then the company proceeds to the screening committee. The committee is comprised of investors and people who know good deals when they see them. There are experienced entrepreneurs, CPAs, attorneys, consultants and others. Each screener reviews several deals according to a consistent set of guidelines in the form of a rubric in the Valid Eval system. Valid Eval ensures that all judges are using the same criteria and that the decision making process is entirely transparent. We ensure that each company gets at least three “sets of eyeballs on it” so that we have a variety of perspectives and ensure that a company doesn’t get in or disqualified because of one person’s individual biases. The final cut is determined based on the inputs of the screening committee and twenty companies plus three alternates are selected to move ahead.
The selected companies and alternates are all assigned one or more pitch coaches who will work with them on their pitch, strategy and funding goals. Each company and pitch coach attend the Rockies Venture Club “Pitch Academy” where they learn the ins-and-outs of venture capital including pitch strategies, valuation, exit strategy, story telling, term sheet negotiation and preparation for due diligence.
One week before the conference there are two days of pitch practice with a group of peer advisors. Each company pitches before the audience and receives critique on their pitch. Those that are not ready may drop out at this point and have their spot taken by an alternate. The companies who progress onward spend the next week refining and practicing their pitch so that they could deliver it in their sleep if they had to.
The result of all this preparation, screening and hard work is the twenty highly qualified companies that you see on the stage at the Angel Capital Summit. Angels can see enough deals in two days to see how high the bar has been set for Colorado companies (and a few out-of-state companies too). For the Angel Capital Summit pitch companies though, the pitch is just the beginning. The real process of funding begins after the event when the Angel Investors get together and share in due diligence and negotiation to fund an average of 25% of the companies that pitch at the event.
Angel Capital Summit is a two day event, March 18-19 at the University of Denver Sturm Hall, Davis Auditorium. Twenty companies will pitch to investors. This year’s theme is “Building Value” and we have an all star group of speakers and panels who will address investor interests in building value in early stage companies.
Peter Adams is Executive Director of the Rockies Venture Club, Managing Director of the Rockies Venture Fund and co-author of Venture Capital for Dummies, (John Wiley & Sons 2013) Available at Amazon, Barnes and Noble and your local book store.