Looking to Angels

An interview with Carol Sands, managing member and founder of The Angels' Forum.
by Sally Richards

If it takes a village to raise a child, than it certainly takes a group to bring a startup to fruition. Carol Sands, managing member and founder of The Angels' Forum in Palo Alto, knows that it takes a lot of nurturing to keep a company on the straight and narrow path to success - especially in a .com environment where creativity is especially encouraged.

"People have been investing in other individuals since the beginning of time," Sands says about the concept of angel investing. "Money sources back then were called patrons, today, in Silicon Valley, we're called angels."

Sands came from a sales and marketing background where she worked for companies such as Xerox, First Bank Systems, Motorola, Coopers & Lybrand and Arthur Young until the startup bug bit her and she founded MarketingPlus, a sales management and marketing consulting firm. Having been in a position to see companies make mistakes and the need to go in and fix them, she knew how to avoid many issues in the first place, and felt that a group of people knowing the different pitfalls of running a company would be a great resource for startups.

So, in 1997, Sands founded The Angels' Forum. She handpicked a group of experts from different disciplines who were willing to put their money and their time into the efforts of building companies from, in many cases, ground zero. She chose people with outstanding expertise in marketing, finance, human resources, sales, operations, research as well as leaders from the different industries represented in Silicon Valley. Many in the group had been serial entrepreneurs.

"Basically we're a group of very successful entrepreneurs who are choosing to vest in startups with our personal wealth instead of starting companies of our own. Before joining our group, most of the angels had an average of 4.3 startups per person, most of which went public. Not all of the group, but a large number, just decided not to become so involved in running companies at the executive level, they made a life decision to spend more time with their families and working with charitable efforts. I love working with startups as an investor rather than being the entrepreneur; it allows me to be in the entrepreneur space without the time commitment that you absolutely must have when you're on the executive team. I equate it with being a grandparent; when the baby is sick and up all night, you still get to go home and let its parents take care of it."

There's a frenzy of entrepreneurs touching down from all points of the earth to garner an opportunity of starting a successful company in Silicon Valley. Hotels are so full that you may have to stay 40 miles from your destination. Everywhere you look people have a dream of starting the next Yahoo, entrepreneurs are traveling in groups of executive teams from angel to venture capitalist meetings - all of them looking for a source of revenue to fund their startups.

With the masses looking for funding, companies and individuals need to put entrepreneurs through the paces before they spend any face time with them. All of the companies seeking funding from The Angels' Forum go through an online application process at www.AngelsForum.com. The applications then go through the first round to see what their viability is in their relation to the companies the group already sponsors, or if the group feels they have the expertise to ramp-up the company, or has a particular interest in the founder, product, service or team. Much of the process is based on past experience and even some on intuition. Then the due diligence continues with a thorough investigation of the company's technology (patents, etc.) and its team members. Then it's face-to-face time where the executive team comes into the office and pitches to the entire group. The Angels' Forum has more than 45 companies in its portfolio, many of them with products and services already fueling their bottom line and high hopes of IPOs. A few of The Angels' Forum companies include Acteva, CyberBills.com, ELetter.com, Guardian Angel and Light Engineering.

Does being a woman angel make Sands more accessible to women entrepreneurs? "I know I attract woman entrepreneurs. Maybe its because I seek them out more, maybe its because women entrepreneurs are comfortable approaching me," says Sands who recently mentored female entrepreneurs for the Forum for Women Entrepreneurs (www.FWE.org) for its Springboard 2000 event. "I do have some advice for all entrepreneurs - don't try to do it alone. Pull together a team of stars of really outstanding, proven performers. Tell them the idea and develop the plan. If the company succeeds, there will be more than enough wealth to go around."

What does Sands have to say about business plans? "Communicate your ideas plainly, I especially hate business plans that string a bunch of trendy business words together and leave me wondering what I just read. Visual aids really help. Make it real easy for me to understand your business concept. If you can make it fun, I'm more likely to remember it, to pass it on to other members in the group to share the fun, and to talk about it with fellow investors. Of course, the best way to get any investor's attention is to being introduced by a sponsor who we know and trust. When they do the pitch, they need to know what the company does and why it is special. My suggestion is to rehearse the sponsor! It also helps to garner good will if you have an entire team when you pitch to the group - it looks great when you can show that others believe in your ideas and are also willing to invest time and their careers in it.

"We love investing in teams! We are also pretty good at detecting false teams - ones that were put together just for show. Ultimately, we are investing in people. If we believe in the people, we will typically make the investment if the business idea is viable. Alternatively, you could have a killer business idea and awful people, and we will pass. We know it is just a matter of time before a bad team will fail."

Group members personally mentor their companies in whatever discipline a company needs guidance in. Is it worth the effort and stress? "It's addictive," Sands says of the satisfaction she gets from working with startups. "It's an emotional rollercoaster ride - with lots of ups and downs every single day. The best part is the people - lot's of committed dreamers who live to see their companies succeed. People come from all over the world to make it happen here. Many times, I can't tell if six months ago they lived in Italy, Pakistan, Hong Kong, wherever. It's very clear that in order to be in the right place to make their dreams come true they've had to move here. We try hard to give good ideas an opportunity, but the best part of this entire businesses is to see our companies succeed, then we know we've done our job."