Seed Capital From Angel Investors: Chris Rivera, Co-Founder, WINGS, The Washington Medical Technology Angel Network (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: If a company is out of Washington state, could they still reach out to you?

Chris: It’s possible. We’ve worked with some companies from British Columbia and from Oregon, for example.

Typically, these companies are either looking to establish a Washington base or have already established a Washington base, so we’re happy to do that with them.

If they’re going to be out of state and remain out of state, we may be able to help them, but it won’t be to the same extent. We’re basically a Washington state life sciences trade association, and our goal is to help the companies that are either going to be setting up here in Washington or growing here in Washington.

Irina: Do you receive any financial help from the state?

Chris: We do not.

Irina: How is the WINGS Angel network funded?

Chris: The main sources of funding so far have been sponsorships and members’ annual membership fees.

Irina: Can entrepreneurs pitch you through your website?

Chris: Yes. There are two websites. There’s the WINGS website, and that’s medtechwings.com. And then they can also get through www.washbio.org, our WBBA website.

Irina: What is the size range of your investments?

Chris: From $250,000 to up to the $3 million or $4 million range. And that’s total investment, that’s not individual.

Irina: So the $3 million to $4 million investments were syndicated with other investors?

Chris: Yes. The amount raised by the individual companies was, typically, by multiple investors.

Irina: What are the ranges per individual investor?

Chris: It varies. It’s hard to say because a lot of the transactions are done privately. We don’t ask for that information, so it probably varies widely. That’s typically confidential. The company and the investor negotiate.

Irina: How long does it take for a company to receive funding?

Chris: Again, it’s hard to say. For some of them it’s been a few weeks. I think there are some that are probably still in discussion.

Irina: Who usually conducts the due diligence?

Chris: The angels themselves.

Irina: What role do you think valuation plays?

Chris: I’m sure that’s how they ultimately negotiate the value and the equity portion they get.

Typically, what a company will have is a term sheet, and the investor will say either that it’s reasonable or it’s not. If it’s not, then they’ll say, “Here’s what we think it’s worth,” and they ultimately get to a point where they agree or they don’t on the valuation and what the investment is worth.

A lot of times, they’ve already raised money through friends and family, so they’re either looking for a step up or at least to not have a down round. Again, a lot of these are negotiated independently and over time. You don’t see the same type of syndication as you do with venture investors. These are typically individual angels, and they may or may not have done deals with other angels in the group.

Irina: Do you know how much equity they are usually looking for?

Chris: I couldn’t tell you. You’d have to ask the angels themselves.

Irina: Do you know what stage of a company’s development they prefer to invest in?

Chris: These are, typically, very early stage. It’s going to vary by angel and by company. We’ve seen companies that have been looking to raise money to increase sales and marketing. We’ve seen companies raising money to do some early stage prototyping. So, it’s a wide variety. I haven’t seen any patterns, yet.

Irina: Would you have any idea about the size of the market they are looking for?

Chris: Again, it varies hugely. There’s no standard. I’ve seen it from $100 million to $1 billion.

Irina: In the med technology field, do you have a specific sector preference?

Chris: No. It’s been a wide range. There are device diagnostics and software IT. We’ve seen cardiovascular; we’ve seen orthopedic; we’ve seen genetic testing.

Irina: Do you know what their preferred investment type?

Chris: I think they would prefer preferred shares, but, again, it all depends on the terms, what investments, if any, they’ve been previously given in the company.

Irina: What is your strategy for growing this angel network?

Chris: The main goal right now is to increase the number of angels participating and being active. That’s really where our focus is right now – on recruitment of angels.

This segment is part 3 in the series : Seed Capital From Angel Investors: Chris Rivera, Co-Founder, WINGS, The Washington Medical Technology Angel Network
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