TRIANGLE ANGEL PARTNERS
OUR CRITERIA
While the merits of each investment will vary, we evaluate your venture according to the following criteria
GEOGRAPHY
TAP invests in companies within a half-day’s drive of Research Triangle Park, North Carolina. We may consider opportunities beyond that range if they are brought to the group by a member willing to sponsor the company. This means a member has a thorough knowledge of the company’s history, management team, market, and the company already having in place a lead investor that is local to it.
MANAGEMENT TEAM
We look for teams of high-quality entrepreneurs with a track record of leadership and performance, either in the company’s specific industry or in prior entrepreneurial ventures. We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. As we will be working together as partners, your team’s credibility is essential. In addition, your team must be open to and comfortable with receiving input provided by angel investors.
MARKET OPPORTUNITY
Your company must demonstrate a strategy to claim significant share of the target market. There are plenty of great business ideas, but not all businesses will generate returns that justify angel investor and venture capital financing. Therefore, providing a solution to a problem with a large potential market is essential.
USE OF PROCEEDS
Funds must be used to accelerate your company’s achievement of key milestones that increase the company’s value. We generally fund activities that include product development, building a sales and marketing infrastructure and hiring key executives.
GROWTH POTENTIAL
We look for companies that have demonstrated that they can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea. Do you have a strategy to achieve multiple sources of revenue? We also require well-conceived financial projections, based on sound assumptions, demonstrating consistent profits and cash flow growth.
COMPETITIVE ADVANTAGE
Your company must have some proprietary features that distinguish you from potential competitors or provide barriers to entry that prevent other companies from capturing your customers with a similar offering. Attributes that convey competitive advantage include intellectual property protection, exclusive licenses, exclusive marketing and distribution relationships, strong brands, scarce human resources (i.e. knowledge and skills), and access to scarce raw materials.
FIT
TAP members have significant executive experience in a variety of fields. One of the benefits of working with angel investors is the active coaching and contact network that our member investors can provide. As such, there must be a fit between members of our group and your idea. Your company should be within a half day’s drive of Research Triangle Park to take full advantage of our resources.
TECHNOLOGY
We prefer to invest in first-of-a-kind new ideas, rather than incremental enhancements to existing products and services. However, we approach highly complex, esoteric technologies with caution. The concept behind the technology must be proven and verifiable. Further, we avoid science projects that don’t demonstrate a clear path to commercialization. Any breakthrough innovation must be accompanied by a strong business plan.
PROCESS
It’s never too early to make yourself known to angel investors. The decision to invest, much like to get married, should be taken advisedly with plenty of time to consider the opportunity. The longer an angel investor is aware of your start-up, the longer you have to demonstrate your progress, problem-solving ability, and commitment. Having a couple of TAP members with greater knowledge about you and your company will help the rest of the members make a well-advised decision.
INITIAL GUST APPLICATION
Triangle Angel Partners (TAP) uses GUST.com to manage deal flow, so your first step is to apply to TAP on GUST by creating your own profile on GUST and granting access to TAP.
Our Fund Manager reviews all applications and screens out companies that are outside of our geographic area (roughly a half-day’s drive from the Raleigh/Durham area) or our areas of expertise and interest. For example, we do not invest in pharmaceutical companies because they require too much capital, and we do not invest in restaurants or consulting firms as they typically do not have the growth and margins we prefer. The Fund Manager may hold on to your application, deciding that a wait-and-see policy is best for your company’s stage of development.
SCREENING COMMITTEE
Our Screening Committee reviews your application in Gust and recommends the Fund Manager decline or schedule your management team to present to TAP’s Executive Committee. The Executive Committee (EC) meets monthly and sees up to 4 presentations. Presentations last 15 minutes with another 15 minutes reserved for Q&A. Following this meeting, the EC will vote to decline your application, watch your company for progress, or invite you to present at the monthly TAP Member Meeting.
MEMBER MEETING
The format at the Member Meeting is identical to the EC meeting – 15 minutes to present and 15 minutes of Q&A. After your presentation, the members will vote to decline your application, watch your company for progress, or initiate a due diligence process.
DUE DILIGENCE
Next, our volunteer Due Diligence (DD) team will send you a list of materials they would like to see, so be prepared! You will need to provide historical and projected financials, board minutes, contracts, employment agreements and much more. The faster you respond, the faster the DD team can get to work.
Due diligence can take between 30 days and 120 days, depending on how quickly you can provide information and respond to questions as well as on how much time our volunteers can devote to the process and the complexity of your business.
DECISION
Once the process is complete, the DD team makes a recommendation to the members who vote on whether to accept the recommendation to invest and the amount of investment.
When TAP makes an investment, our members invest as a group, so we require a majority of interest in our fund in order to make an investment. However, members sometimes request to make a sidecar investment of an additional amount, which will increase the total amount TAP wishes to invest in a business. If the DD team does not recommend an investment, members may use TAP’s DD and make investments individually, if the company allows.
Once an investment has been approved, it takes only two business days to fund the investment.