Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels (Part 7)

By guest authors Irina Patterson and Candice Arnold

Irina: Can you tell us a little more about your VentureLab?

Michael: That’s a separate organization. That’s an organization where we’re directly hired by companies to do a variety of services. It’s like any investment bank or professional services company. We’re working with a company and taking a fiduciary role of working with them and actively building the materials or contacting investors and managing the entire process.

That’s a separate thing, totally separate from Cornerstone, although there may be some synergy where some companies that go through Cornerstone may become VentureLab clients, or some VentureLab clients may find a way, and there may be interest from the members to see them.

We get paid to work with these companies as interim executives or advisors in trying to find capital or selling or buying companies on their behalf.

Irina: What kind of companies are usually become clients of VentureLab?

Michael: They’re typically similar to the candidates for Cornerstone or Independence Equity. I would say that sometimes companies that may be too early for Cornerstone or too early for Independence Equity may be candidates of VentureLab.

We’ve had a number of companies that were just, sort of, one man in a big facility with lots of technology. They weren’t appropriate for any of those groups, but we were able to work with them, helping them to build out.

But, again, we prefer there to be a team. We prefer there to be a big opportunity, and typically, they are the ones trying to think about how do they go out and raise money, and we start from a blank slate and help them think through the opportunity. What is the right funding plan? Are they trying to build up their finances from scratch? How much money do they need, when do they need it? When should you tranche it? And we help them to create a valuation or terms that we believe to be attractive to investors.

Then we work with the company and the executives, on their behalf, to find the appropriate investors, wherever they are – across the country or even worldwide – [they could be] high net worth individuals, family offices, private equity as well as large corporate strategic partners to fund it.

We get very actively involved, almost like a partner, [playing] an internal/external role in propelling these companies forward.

Irina: How do you usually get paid for that?

Michael: Usually, we get paid cash on an ongoing basis, a monthly basis. A lot of it is backend based in cash and equity, based upon the success of our efforts, either if we’re raising capital or executing transactions.

Usually for the companies we get involved with, we’re looking for it to be a long-term relationship. So, a lot of the companies we’ve been involved with have been multi-year relationships where we’ve helped them through several rounds of capital or several different opportunities where we may have been an interim CFO at one time, and they needed us to take control or do specific development for them. It winds up being an evolving process, and our key role is a long-term relationship.

VentureLab is my full-time job. Then Independence Equity, which is about to launch, will be taking up more and more of my time. Cornerstone is a side effort. My other partner in Cornerstone is Larry Hayward, so he and I also work together in VentureLab and Independence Equity. Then we have some other associates who are pretty active with Cornerstone. We have a lot of internal associates and interns who help do a lot of the screening, help do a lot of the due diligence.

We also have members who become active on different committees, whether it be for screening for investment committee or even for membership or social or other stuff. We bring together internal management resources as well as members for a lot of the activities for Cornerstone.

Irina: Does Cornerstone have any paid management?

Michael: Yes. We have some associates and interns who are paid or, at least, have some stipends.

Irina: Where do your interns come from?

Michael: We get a lot from the graduate schools, often [from] the local business schools, depending on who they are, we get them for a full year or a semester. We also have a few different channels of which we constantly have a source of talented individuals.

This segment is part 7 in the series : Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels
1 2 3 4 5 6 7 8 9 10 11