At Georgetown Angels when we get a VC to commit to the Series A financing for example $5m, just at the last minute I have my CEO say to the VC, “Wait, I don’t want the check for $5m. Make that $4.5m and here’s a list of 20 people that will invest $25k each after the $4.5m has been wired. The names on that list are all CEOs and co-founders of major league companies scattered across the US, Europe and Israel. Then when we announce the Series A financing with <your big name VC fund> we disclose that these 20 people also participated.” The names on that list are a who’s who of VIP entrepreneurs. People will wonder how a company located in Stockholm, for example, managed to get those people from the Valley and all over the world to invest in that round.
I first saw Rick Marini, CEO of Branchout, do this. Branchout is basically Linkedin on Facebook. He tells his story in detail in my book. If you go to his web site and click on his investors, the list is amazing – Shawn Fanning from Napster, Michael Birch from Bebo, Naval Ravikant from Angel List, Dave Morin from Path, Matt Mullenweg from WordPress, Chris Michel from Military.com, Tickle co-founder James Currier, and others. When we do this for our companies at Georgetown Angels it gives you a Branchout rocket launch.
It may be counter intuitive to add angels after the VCs, but it’s a brilliant move. And those angels are lucky to get in. At $25k being a small amount for them, they don’t care if they lose it. If you want to be one of the 20 people on that list get in touch. We just did one of these this week in San Francisco for a company from Stockholm. After a day of furious eight back-to-back meetings here at the J.P. Morgan Healthcare Conference I was enjoying a few glasses of well-deserved wine at our table in the Redwood Room at the Clift Hotel and the traffic of my contacts kept coming by as I was sitting with two of our healthcare CEOs and one of our investors. I told each of them about the $5m we were closing with a specific VC (can’t disclose) and told them that we have carved out $500k for 20 VIPs at $25k each. They all said yes. The company had presented at our Demo Day; so most of these folks had already heard the pitch and met the CEO. As such, it moved very quickly. Bring in angels after VCs – a smart move.