What 175 Investments Have Taught the Pasadena Angels About Startup Investing

The Crowd

Chris Wadden takes to the stage with a bounce to his step that underscores how much he loves his job. He exudes mentor as he takes the standing-room only audience on a trip filled with interesting commentary and advice about how to get funding through the Pasadena Angels and, more broadly, what to focus on in your own business.

As Chairman of the Board of Pasadena, CA-based Pasadena Angels, he shepards a coalition of about 100 independent investors providing seed money for SoCal companies. After 175 investments ranging from from $100 thousand up to $1.5 million (avg investment: $300k), he took to the Innovate Pasadena Friday Morning Coffee stage to share some of what they have learned.

True to what seems the nature of the organization, the audience was smattered with Pasadena Angels who Mr. Wadden turned to at various points.

In 2015, the Pasadena Angels had three successful exits: Pasadena-based software developer Bluebeam Software, Online English language school Open English, and CRM-maker Mind Body. Mr. Wadden was quick to point out that these were not overnight wins. Bluebeam took 12 years and the others took 7 years each to mature. It’s important that this was his lead point, in my opinion.

According to slightly outdated data provided in the blog post “Venture Capital Exit Times” on the Angel Blog, time-to-exit has been steadily increasing since the heady bubble days.

​Of the 175 investments made by Pasadena Angels, 15 successful exits. In 2015, the group has invested a total of $5 million in 27 deals so many of those 175 are still gestating.

So, what do the Pasadena Angels look for?

Earners better than burners. They would like to see evidence of a desire to start creating return instead of burning through investment.

Traction is better than total addressable market. They would rather see a company actually making headway into a defined niche than being in planning against a huge market.

Focus on break even better than going for home run. Going for breakeven is less of a gamble and, don’t forget, four singles scores a run.

The jockey is more important than the horse. They are investing in people and talent more than just the idea or plan. This jockey concept came up time and again, so it’s very important. What they look for in a jockey is someone who is not afraid to ask for help. They love grinders, people who get up early and are out meeting and networking. They like people who seek incremental improvement. Sales capability is a must. They must be good at raising money and team building.

In terms of the horse, they look at intellectual property protection, market validation (see traction, above), and positioning.

Win-win deal. It’s always better if everyone wins.

An interesting point that Mr. Wadden made had to do with Crowd Funding. The Pasadena Angels sees crowdfunding as a mixedbag.  While it ​shows traction (good) it does not represent investors.

To apply for Pasadena Angels funding, head over to http://pasadenaangels.com/apply-for-funding/

They get about 40 applications per month.  The third Wednesday is a pre screening meeting where they select the top 4. These four present last Wednesday of month. They Pasadena Angels vote and the top 2 come to an all-member breakfast meeting.
Interest determined at the breakfast funding happens as quickly as 45 days.

Chris Wadden talks about the Pasadena Angels

Chris Wadden talks about the Pasadena Angels