Angels in Oregon: The definitive guide to early stage investment opportunities for both startups and potential investors

[Editor: John Sechrest has put together what is, arguably, the most comprehensive collection of Oregon Angel events and organizations in existence. It’s an honor to have the opportunity to publish this guest post.]

[HTML1]Just as the sun is starting to fade and the rain is starting to be a daily occurrence, the Northwest Startup Ecosystem is starting to bloom.  During the quiet of the summer, seeds were being planted, companies reviewed and now in October, things start to move. In Oregon and Washington, there are many activities that give startup companies the chance to present to Angel Investors.

In Oregon, there is a flow to the year. Beginning with small opportunities to get out in front of people and followed by big events that can put you in front of potential investors.

This is the week where everything comes into full glory:

• Oct 14 – NWEN First Look Forum (Seattle)
• Oct 14 – Seed Oregon #1 (Portland)
• Oct 16 – Bend Venture Conference (Bend)
• Oct 20 – Angel Capital Expo hosted by Keiretsu (Seattle)

Stepping through the Oregon Angel cycle

The Seed Oregon events start with quick pitches, giving you the ability to network with Angels and other entrepreneurs. The momentum continues to build from these beginnings to several more events throughout the year. Following the Seed Oregon pub talks, the Oregon ecosystem has several Angel Conferences in Bend, Portland, the Gorge, and—this year—Eugene. Each of these Oregon Angel Conferences has an associated collection of investors who have formed an LLC and which puts forward an investment as part of the conference. Typically the investment is in the $100,000 range.

As a part of these Angel Conferences, the finalist companies are put through a multi-week due diligence process. Entrepreneurs who have not won the conference investment have made comments about how valuable the due diligence process was for them.  More over, this due diligence frequently leads to side deals by the angels who have been deeply engaged in the company evaluation.

At the 2009 Willamette Angel Conference, there was an investment of $125,000 made to the winning company. Shortly after the conference, a second company was funded to a similar amount by a subset of the conference investing LLC. More over, a third company was able to raise a similar amount. Within five months, three separate companies were able to raise funds over$100,000 each. Close to $500,000 investments from a single conference.

After a company makes progress through the Angel Conferences, there is an expectation of a “follow-on round” which takes the company to the next level. The Angel Conference term sheets typically are written as a convertible note, with a 12-18 month timeline for finding the next round of funding.

In Oregon, the Oregon Angel Fund (OAF) provides a medium sized Angel round, typically in the $400 – $500K size. OAF partners with the Portland Angel Network to review company pitches and to engage in the due diligence. The goal for OAF is to invest in 4-5 companies a year, leading to an investment every couple of months.

Startups can also connect in with several different Angel Networks which also do investments. Angel Networks will meet monthly to review company submissions and to decide which companies will get investment. The Portland Angel Network, Oregon Angel Fund and the Women’s Investment Network are all affiliated with the Oregon Entrepreneurs Network. The OEN runs several programs for entrepreneurs. In addition to the conferences, OEN provides business plan reviews and a series of courses on topics vital to startups.

One of the great side benefits of this public conference format for Angel Investing is that it grows new Angel Investors as well as supporting the growth of entrepreneurs. The initial investment in an Angel Conference is around $5000. While the Oregon Angel Fund requires an investment of $25,000. These costs for participating as investors in the programs, provide a low cost, low risk way for someone interested in Angel Investing to explore the process with a support network to help guide the way.

This pathway from small ($5000) to medium ($25,000) to large ($100,000) investments gives new angels a way to build a diversified portfolio and a set of investing skills. It provides a way for entrepreneurs to develop relationships with Angel investors who can become champions for their work as they grow into needing further rounds of funding.

Angel investors beyond Oregon… but still within reach

The Northwest Entrepreneurs Network (NWEN) has a series of pubtalks, classes, business plan reviews , morning networking breakfasts as well as the NWEN First Look Forum, an introduction to new companies. In contrast to the progression seen in the Oregon efforts, however, the Washington Angel groups are focused on the bigger deals. There is no equivalent collection of Angel conferences that put money into the equation along with due diligence.

The Puget Sound area has several very successful Angel investment groups, including the Alliance of Angels, Tacoma Angel Network, Bellingham Angels, the Seraph Capital Forum, the Northwest Energy Angels and the Puget Sound Venture Club. Each of these is an Angel Network, where you can connect with Angels and they may or may not invest in the deal that is presented.

The Keiretsu Forum is a larger collection of groups in several cities including Seattle, Bellevue, Boise, and Portland. They are a for profit Angel program which typically invests larger amounts into companies. This tends to cause them to be investing in later stage companies than the Angel Conferences.

On Oct 20th, the Keiretsu Forum is hosting a Angel Capital Expo, gathering several different angel groups together to look at several companies. This follows closely on the heels of the NWEN First Look Forum on Oct 14th, which will provide 12 companies the chance to pitch to Angel investors for the first time.

Generally, none of the Washington conferences, pub talks or meetings provide an investor LLC making an investment in the prevailing company. The one group which does have a prize is the Zino Society, which puts up a $50,000 prize for the prevailing company. In the Oregon Angel Conferences and the Oregon Angel Fund, investors are typically putting in 20 to 40 hours of due diligence on each company. This due diligence often has positive transformative impacts on the companies that are participating.

In Washington there is substantial deal flow and substantial amounts of Angel Investments being made. This investment is in the form of private group investment, with little insight provided to the novice Angel investor or to the novice entrepreneur. The Oregon process has significantly more access for companies to learn about the process, to engage deeply with Angel Investors and to watch the process from beginning to end. The key question will be if that process leads to more entrepreneurs who make more successful companies that lead to more successful exits. Since most Angel investments take an average of 7 years to mature, the results are not yet in on the Oregon process.

Running with the Angels

Both portfolios from the Angel Oregon Conference and from the Oregon Angel Fund are running above expectations for companies at their current stage. This suggests that the process is working well.

If you are an Oregon entrepreneur looking for a way to make your company stronger, consider going to the Angel Conferences and Pub Talks. The conferences are an effective way to learn more about the questions that you need to know the answer to. Your business will be stronger for understanding the questions that the Angel Investors are asking, whether or not you are seeking external funding. If you are a successful Oregon entrepreneur and you get your Oregon Angel Funding, there is a good chance you will be heading into Seattle to look for Venture Funding if you need follow on funding. Consider participating in the Seattle events and start building your network in the Seattle region.

If you are a Washington Entrepreneur, consider coming to an Oregon Angel Conference. You will learn a lot about the process and you might find a few good ideas to take home.

There are some interesting activities happening in Oregon which might be a way for us to increase the number of successful companies in the Northwest.

Complete Angel schedule

• Oct 14 – NWEN First Look Forum
• Oct 14 – Seed Oregon #1
• Oct 16 – Bend Venture Conference
• Oct 20 – Angel Capital Expo hosted by Keiretsu
• Oct 29 – Venture Northwest
• Nov 12 – Seed Oregon #2
• Jan 13 – Seed Oregon #3
• March 5 – Angel Oregon
• May 13 – Willamette Angel Conference
• May ? –  Gorge Angel Conference

Angel and investor organizations

• Alliance of Angels
• Bellingham Angels
• Founders Coop
• Keiretsu Forum
• Keiretsu Forum Bellevue
• Keiretsu Forum Boise
• Keiretsu Forum Portland
• Keiretsu Forum Seattle
• NW Energy Angels
• Northwest Entrepreneurs Network (NWEN)
• Oregon Angel Fund (OAF)
• Oregon Entrepreneurs Network (OEN)
• Portland Angel Network (PAN)
• Portland Venture Group
• Puget Sound Venture Club
• Seraph Capital Forum
• Smartups
• South Willamette Angel Network (SWAN) (Eugene)
• Tacoma Angels
• Valley Venture Group (V2G)
• Willamette Valley Investors Network (WVIN) (Corvallis)
• Women’s Investment Network (WIN)
• Zino Society

John Sechrest founded and organized the 2009 Willamette Angel Conference in Corvallis in May of 2009 and participates in several OEN and NWEN programs.

(Image courtesy Old Sarge. Used under Creative Commons.)