Start-ups meet Angel Investors
The U.S. created only 80,000 new jobs in June, according to the Labor Department. This tepid job growth echoes the importance of starting a business and securing the necessary funding to grow. TheGrio recently spoke to members of the Venture Capital Access Program or VCAP© to discuss their highly anticipated Pitch Night, which was held on June 27th in New York City. The program’s goal is to connect women and diverse entrepreneurs with accredited angel investors. VCAP© is a partnership between the Harvard Business School Alumni Angels of Greater New York (HBSAANY) and The National Association of Investment Companies (NAIC).
Nearly 150 businesses submitted applications to participate in the program which launched in early May. Fifteen companies were selected for round one and six finalists advanced to Pitch Night. The finalists included New York-based firms Castle Surgical’s, Shadow Digital, Take the Interview, Tiger Trade, Torsh, Inc., and Philadelphia-based MetaLayer.
Although VCAP focuses on underrepresented groups, David Teten, Founder and Chairman of the HBSAANY and Partner at ff Venture Capital, says companies want to invest in early stage companies because this is where disruption is occurring. “We want to be on the side of growth with companies that benefit from technological disruption,” he explains.
Teten says changing demographics in the U.S. and the increasing power women have in business and in the home encouraged him to develop a program such as VCAP©, but he admits investors are looking for the highest returns. “It just so happens our profit maximizing views lead to a social goal – serving the emerging market,” Teten says.
The HBSAANY has invested more than $1.5 million in six companies over the past 12 months. Teten estimates the average investment is $84,000.
View From Pitch Night Finalists
Tiger Trade, an international sourcing company, was founded in January 2010 by Tanjila Islam, who also serves as the CEO. The company has offices in Vietnam, Indonesia, the Philippines and Thailand. Islam says her firm has gained so much from VCAP© and pitching her business to potential investors. “Going through the screening committee pitch really had me and my team take a deeper dive into our business,” Islam explains. “Investors want to know you have an understanding of your market.”
She advises other entrepreneurs to complete milestone, have target date and be able to discuss projected financial returns.
Courtney Williams, Co-Founder and CEO of Torsh, Inc., which seeks to improve scholastic achievement by providing advanced tools and services to teachers and parents, also pitched his company to potential investors. This former AOL employee has worked in four previous startups.
He says pitch night was a pretty remarkable experience. “It helped to sharpen my pitch, regardless of what happens, my pitching has become better and more effective,” Williams explains. Williams hopes to raise $1 million during his first round of seed funding.
Proof of product or service is a recurring theme. “It’s much easier to have a conversation around funding if you have something to show,” Williams advises. He says minority investors often don’t have the ability to get their business off the ground and tend to ask for funding during the idea stage. “It’s better to show, not tell.” He says ideally having a track record of a successful business venture will increase the likelihood for funding.
What’s Next for the Finalists
Ed Dandridge, President and CEO of the NAIC, says there are no losers in VCAP©. The program will assist companies that are not ready for private equity now by assisting them with other resources or financial support. He says finalists will engage with potential angel investors over the next few months. “It’s a huge win for them, to be able to get in one room with everyone who will matter much faster than trying to secure meetings individually.”
Dandridge has bigger plans for VCAP© going forward. He says they will focus on corporations who want to gain access to start ups.
Shartia Brantley is a producer and on-air reporter at CNBC. Follow Shartia on Twitter at @shartiabrantley