SUB CATEGORIES OF Funding Your Startup

TechCoast Angels (or TCA) represents itself as the largest angel group in the United States. The group started in 1997 has reportedly over 300 members in five regional offices that span across Southern California. The members are executives and former entrepreneurs and represent both technology and non-technologies companies.

As of early 2013, TechCoast Angels members have invested over $120 million in more than 200 startups, or on average $600,000 per startup. TechCoast evaluates businesses that are seeking to raise between $50,000 and $1 million. TechCoast funded startups have raised more than $1 billion after being funded by TechCoast members. In 2012, the group invested in 17 out of the 600 startups that applied for funding purposes (2.8%).

The group claims to provide more than just monetary services to startups seeking their aid. They also claim to bring a wealth of knowledge and experience along with management and connections to potential entrepreneurs who set themselves apart from their competitors at an early stage. These individuals receive the funds and assistance they need to turn their corporate vision into a successful enterprise.

TechCoast Investment Criteria

  • Startup located in Southern California;
  • Startup has resourceful management team with impeccable integrity;
  • Startup has a solution to a compelling business problem;
  • Startup’s potential market is large;
  • Startup has a defensible business model / proprietary technology;
  • Startup has a sustainable competitive advantage;
  • Startup has some market validation;
  • Startup could attract future funding; and
  • Startup has credible exit potential.

Process

TCA represents that it had 900 applicants in 2012, 25% made it to a screening stage and 10% made it to due diligence. Here is the process as described by TechCoast.

Web Application. Startups apply through the TechCoast website that includes pitch decks and financials. This is a link to the signup. http://www.techcoastangels.com/entrepreneur-signup

Initial Review – TCA staff and members review to weed out startups that do not meet the groups’ criteria.

Pre-Screen Presentation – Startups that pass the initial review are invited to pitch to a small group of TCA members for up to 15 minutes followed by a question and answer session. If a startup passes the pre-screening session, it will be invited to present at a screening session.

Screening Presentation – Three or four startups present at bi-monthly screening sessions for 15 minutes followed by a question and answer session. The entrepreneur is given immediate feedback if the startup will proceed to due diligence.

Due Diligence – A due diligence team is formed based on the number of interested members who signed up during the screening presentation and a deal lead is chosen to coordinate the due diligence activities. If the due diligence results are positive, the startup moves forward to a monthly TechCoast lunch or dinner meeting, depending on the applicable branch of TechCoast.

Monthly Lunch/Dinner Meeting – Startups that pass due diligence present at monthly lunch/dinner meetings at each network, introduced by the “deal lead”, who led the due diligence team. This allows the entrepreneurs to present to more TechCoast members. This step is the final time for startups to pitch live to TechCoast members through TechCoast efforts. TCA members’ terms of investment follow “standard” terms for financings developed over the years by VCs and other sophisticated investors.

Funding – If members have sufficient interest (and only a small number of members are required to be interested), funding occurs by individual members. However, all members must invest on the same terms. The smallest investment is usually $25,000.