We had a fantastic webinar this morning on “Angel Investments and Term Sheets.”  During the presentation, the attorney (Karl Israelsen from Stoel Rives) talked about “traditional” deals and terms that are coming across his desk.  Part of the discussion was about terms that could possibly be included in a debt or convertible debt deal.

One thing that the attorney cautioned entrepreneurs on was taking terms with a personal guarantee.  By definition, the term investor means that you will be taking up some risk.  When an investor includes personal guarantees with other traditional terms (security agreement on company assets, convertible option, higher interest rate, etc.), that investor is then acting more like a bank or a financial institution and not an investor.

This topic usually stirs up quite the discussion — especially with those “investors” that like to include personal guarantees.  What do you think about the subject?  Should investors feel ok about attaching personal guarantees on the deal to reduce their risk?

FundingUniverse was fortunate enough to be able to participate in today’s Utah Angel Summit.  It ended up being a fantastic turnout with nearly 100 angels, vcs (and some service providers) in attendance.

Luis Villalobos, the founder of the world’s largest angel group (Tech Coast Angels), was the keynote speaker and he did an amazing job.  You can tell the Luis has been around the block and knows his stuff.

Here are a few things that stuck out in my mind:

• I was very impressed with his approach of “transforming” a company into a great deal.  He spoke about how 99% of the deals are not great deals when they first come to you… BUT, as an investor, you can transform good opportunities into great ventures.  The concept was refreshing because so many investors just automatically “pass” when they see the smallest concern in the deal.
• He mentioned a few signs of the type of CEO he looks for:
  • Impeccable Integrity:  It’s more than the normal “not going to lie, steal, etc.” integrity.  Luis is talking about the type of entrepreneur that identifies problems (early) and takes responsibility (as opposed to hiding problems, making excuses, shifting responsibility, etc.)
  •  Knows Business Model:  the CEO that knows exactly what the business has to do to be successful and focuses on them — and we’re talking about the nitty gritty key drivers/statistics.
  • Continually Measures:  Piggy-backing on the last concept… the CEO is continually tracking, analyzing, and adjusting the key metrics of the business.
  • Knows how to Connect the Dots:  The CEO just makes things happen.
  • Motivational:  The CEO can motivate his/her team.  Can recruit team members and communicate vision.
  • Focuses on Value to the Customer:  The CEO is more focused on delivering value to the customer (over revenue/profits) because they know that customer value = success.
• Luis knows angel investing inside and out.  He knows what to focus on.  He knows how to bring value to the company.  He has built a very successful and well-performing angel group.

Even though the event was for the angel investor, I always encourage entrepreneurs to attend those types of events.  To me, the more that you know about the investor’s motives and expectations… the better.

Thanks to Luis for a great event today!

A new premier social network for investors, launched by FundingUniverse, will connect like-minded investors in an invite-only online community. The exclusive network will be open only to those investors who have been invited to participate.
Some of benefits of the investor network include:

• Connection to Active Investors across the Country: FundingUniverse is a place to collaborate and connect with other like-minded investors. As a member, investors will be able to see each other’s investment preferences, portfolio companies, and network.
• Dealflow Collaboration & Group Tools: Instead of bulky and expensive group software, any member can create their own online investment group by the click of a button. As a group manager, investors can invite (or delete) as many other investor friends as desired. FundingUniverse can even create a personalized website for deal submission!
• Pre-Screened Dealflow: Instead of hiring a personal assistant, FundingUniverse will find and screen the deals that meet an investor’s preferences.
• Dealflow Organization: The FundingUniverse technology allows for easy organization of all deals. Investors can search by industry, state, funding amount, or by name. All of this information will be securely stored in the investor console.
• Private, Secure Network: All investor contact information is kept secure and private. Because our network is permission-based, no member (or entrepreneur) will see the investor’s personal information unless the investor allows access.
• Personalized Alerts: When a deal meeting an investor’s preference is posted, the plan will be emailed to the investor immediately.

As a busy entrepreneur you may not have the time to read the latest and greatest business books. These books which contain suggestions on ways to enhance your business are must reads for any entrepreneur. However, most likely you cannot find the time to read all of these books.

One of my favorite web-based services comes from Business Book Summaries. They take the most popular business books and create a “cliffs notes” version of the book highlighting the key themes and messages. Instead of reading the book over several days, you can capture the essence of the book in minutes. You can download the condensed book to your iPod, computer (powerpoint, pdf, video) or PDA. It is a paid service, however, there is a free 30 day trial offered. Check it out.

How do you assist an entrepreneur in growing a successful business? Besides providing capital to the entrepreneur, industry expert Bill Payne suggests ways to help entrepreneurs reach success.

1. Keep the team focused – Very early stage entrepreneurial ventures tend to be opportunistic as a necessity. They seek revenues and income from all sources – consulting, non-strategic revenues, products unrelated to the business plan. This is quite understandable, since the company is as yet unfunded and scrambling for survival.  In fact, chasing opportunistic revenues can become a culture for entrepreneurs and their teams. However, once entrepreneurs have raised capital from investors, it is necessary to focus, focus, focus on the strategy of the plan. Often this transition is very difficult for the team. Investors, especially those serving as Directors, will be very effective at the new mantra – stay focused on the plan.
2. Recruit an awesome team - Angels have large rolodexes which can be effectively utilized to find candidates to fill out the management team. As importantly, angel directors are very effective at helping in the interview and selection processes, to assure hiring the best candidates. The investor group can provide valuable assistance in this task.
3. Identify and approach large customers and partners – Angels can also use their rolodexes and networks to identify appropriate customers and partners. More importantly, they can find key decision-makers within those important companies and often arrange introductions for the CEO and/or key team members. Networking broadly is the key to finding introductions, so use your entire set of investors to find and meet important new customers and partners.

The next FundingUniverse Speedpitching event on August 29, 2007 provides a perfect opportunity for investors and entrepreneurs to meet. If selected to present at the event an entrepreneur will have the chance to pitch to dozens of accredited investors. Investors will see ten quality deals just over lunch. To apply to participate in the Speedpitching event visit

http://www.fundinguniverse.com/services/339/340/utah-speedpitching.html

The Speedpitching event is a sweet opportunity to pitch an idea to a roomful of investors. (Really, our last event in June was so packed with accredited investors, it was standing room only.) If you are looking to raise capital or trying to find the next great deal join us on Wednesday August 29, 2007.

While industry and work experience is an important part of what makes a good entrepreneur. Brock Blake, FundingUniverse CEO, explains the energy of the entrepreneur may sometimes outweigh her experience or lack there of.

Brock explains, “An inexperienced entrepreneur must be teachable. The last thing you want is a know-it-all inexperienced young entrepreneur. On the other hand, an ambitious high-energy businessman who is willing to learn from his/her mistakes and the mistakes of others will be a valuable asset to any team.”

Brock offered a few suggestions for the inexperienced entrepreneur.

• The entrepreneur must dedicate herself to learning. How much time do you spend each day learning new things? Are you reading the latest news, blogs, magazines, and books? If you do, this will help you to be experienced beyond your years.

• A young entrepreneur must surround herself with experienced mentors. There is (almost) nothing that can replace experience. I am very grateful for the many mentors that give me help and advice on a daily basis.

• Finally, the entrepreneur must use energy to their advantage.

What do you think? Have you invested in an entrepreneur who lacked experience but had the energy and drive necessary to succeed?

As we will be celebrating the Fourth of July this week, I found a great article called Celebrating the Freedom to be Entrepreneurs by Todd D. Stottlemyer.

In the article Stottlemyer eloquently states, “Small-business owners now account for more than half of the nation’s gross domestic product and are generating virtually all net new jobs. They don’t take lightly the gift of freedom so eloquently expressed in the Declaration of Independence and enshrined in our Constitution. Without their vigilance and without their efforts to remind legislators and policymakers of the importance of free enterprise, the laws of the land wouldn’t be favorable to those who start and grow businesses in this country, and the opportunities their efforts provide for future generations.”

In Al Golin’s book, Trust or Consequence, he says, “At the peak of the day trading, dot-com boom, people often invested in companies that seemed to be the next big thing, and little thought was given to these companies underlying principles. A lot of financial analysts and investors, however, were burned by unscrupulous companies. They witnessed enough high flying organizations go down in flames to start asking probing questions about values and beliefs…I tell this story because everyone knows a story like this one. Whether they’re thinking of joining or investing in a company, people have learned that there’s more to it than immediate financial windfalls. There’s a trend toward long-term investing, and in the long-term, trusted companies do the best.”

You may have been one of the investors who lost money in the dot-com boom. What are you doing differently now? How does trust play a role in the companies you decide to add to your portfolio?

A few weeks ago, I blogged about a new game created by Disney and the Kauffman foundation. I praised the groups for instilling the excitement and importance of entrepreneurship at such an early age.

Anshul Samar, 13-year-old CEO of Elementeo,  recently participated in the TiECon07. Clearly, the next generation of entrepreneurs is getting younger and younger.

Anshul Samar is incredible. Anshul has the business savvy and confidence of men triple (or even quadruple) his age. Watch the video. Listen when he mentions some of the company goals for the upcoming year. You may see Anshul running a Fortune 500 company in the near future.