Back in my corporate days, we used to call situations like this 'coaching moments', or 'teachable moments'.
I need your help.
As I have mentioned previously, at the beginning of June, we announced Plains Angels, an angel group of Midwest investors who were interested in seeing and potentially investing in more Midwest startups in information technology, biotechnology, and manufacturing (as well as rare 'other' opportunities as decided by a subset of the group affectionally named 'the screening committee' which determines if applications are in/out of scope of the group's interest). The group has grown from 50 to over 90 accredited investors since June, and now meets monthly to review startup applications that have been passed by the screening committee. Of the four applicants who have presented, one received investment within nine days, and the other three are in some form of (potentially pre-investment) diligence.
It is customary for me to send out a note to companies that have begun the application process but not yet completed it to remind them that they need to get their application in by a certain date, to give the screening committee time to do a high level review, and then us to work with them to make sure they have the proper information prepared for the group in the right formats (what we call 'pre-diligence'). After last night's second successful startup-presentation meeting, I sent a message out to the 'in progress' applicants at 9:31am this morning to let them know about the deadline the group has to give them appropriate time to review the inbound applications.
What follows is a redacted and anonymized exchange from 9:31 this morning to around 6:30p this evening. If you all have some feedback on how I could have handled it better, please please please comment on the blogpost as I would love to hear of ways I can refine my feedback.
This is just a quick note to inform you that any applications to Plains Angels that wish to be considered to present at the September 10th meeting must be completed/submitted by August 24th. This will give the Screening Committee time to properly review the application, interact with the applicants, and then the pre-presentation diligence to be conducted.
(Side note: The group chose to implement an application fee for companies applying to the group. Although this is customary in some markets, in other (more mature) markets the Angel investors themselves cover the costs of operations. We debated long and hard about this with Plains Angels, as we have no indigenous angel culture in Central Iowa to draw upon, so in our efforts to grow this group locally, we temporarily shifted the onus of expense to fund the group to the applying companies instead of angels. This has not been without complaint from the companies/applicants, however if you look above, the group is for real and not wasting startups' time with arbitrary hoops but rather deeply investing in the community.)(Note: This is important in what follows)
3. Christian, sending on behalf of Plains Angels, 9:37am
"Understood. Like yourself, we have a policy to apply to our group that a fee is charged to cover the costs of the time spent to prepare the opportunity to the angels and to cover the costs of the meetings.
It appears we are at an impasse. Should you choose to reconsider your policy, please feel free to apply in the future.
Who are your 80 angel investors?"
10. Reply by Hugo, 11:02am
"You talk like them, you write like them, you behave like them, you must be one of them
ALL YOU WANT IS A FEE, AND YOU CANNOT PROVE THAT YOU ARE INVESTORS, I WILL PUT YOU IN THE LIST IN A WEBSITE ABOUT FEE COLLECTORS"
11. At this point (12:51pm), Hugo sent a message to the Angel Capital Association to report Plains Angels as a Fee Collector organization:
Are you sure Plains Angels are investors or are they FEE COLLECTORS?
There are lots of these people who play with our dreams and suck little funds we have for their bottomless pockets.
12. The ACA representative, at 5:39pm, responded as follows:
Plains Angels is a new, but real angel group that makes angel investments. They have clear ties and foundation with economic development leaders in their community. While they charge a larger application fees than ACA recommends, they are transparent about these fees, which is important in communicating with entrepreneurs.
When entrepreneurs review angel group Web sites, it is important to thoroughly review their Web site to understand investment criteria as much as possible to determine if they fit you and your company. In the case of Plains Angels, they note that they invest in Midwest companies in Technology, Agriculture, and Manufacturing. It appears that your company is outside of their criteria based on the location of the business (it is assumed it is in (Redacted)). The large majority of angel groups look to invest in companies located within a few hours of them. With that background, you may have your best luck by networking in (Redacted) or nearby countries. We are aware of developing business angel networks in (Redacted) and Latin America, which you may be able to locate through Gust and/or Googling “business angel”.
Best wishes to you,
Angel Capital Association"
And that, as they say, is Yahtzee.
So, dear reader, how could I have handled this better?