CommonAngels is trying to address the perception among entrepreneurs that collectives of angel investors can be slow to make investment decisions, and can hassle entrepreneurs with endless hoops to jump through, Heymann says. The goal is to remake CommonAngels so that it acts and operates more like a venture fund, rather than a somewhat loose collective of wealthy individuals who cut checks when they feel inspired.
"It's not lost on us that angel groups have a mixed reputation," she says. "With an angel group, you've got 30 people in the room, and an entrepreneur may wonder who the real decision-makers are. There can also be the sense that any one of them can kill the deal. To change that perception, we're changing how we operate internally. We want to be seen as a go-to place for seed capital."
Heymann will work with longtime CommonAngels managing director James Geshwiler, though it sounds as though he'll technically report to her. (Another CommonAngels managing director, Chris Sheehan, left late last year to join TrueLens, a digital marketing startup that received funding from the group.) Geshwiler says that the changes the group is going through will be "a 180-degree shift on culture," and acknowledges that the group may lose some members as a result.
The biggest change for CommonAngels will be that more of the money for each deal will come out of the group's $13 million central investment fund, rather than individual members cutting checks. Previously, 10 to 15 percent of an investment round — typically around $1.5 million for CommonAngels — might have come from that central fund, with the rest coming from individual members. Going forward, Geshwiler says it is more likely that half of the round will come from the fund, with the other half coming from a smaller set of members with real expertise in the sector (videogames, for example.) And CommonAngels members will be required, in the future, to put money into that central fund to stay involved with the group.
But the other change is that Heymann and Geshwiler will be two of the members of a new eight-person investment committee that will be able to pull the trigger on deals more easily — there will be no majority-rules vote from CommonAngels members. "These committee members will be representational, and they'll listen to their peers," Geshwiler says, "but the committee and people with expertise in the sector will have a disproportionate vote." He jokes that "the founding fathers got rid of direct democracy for a reason."
The aim is to decide on some kinds of deals within a few days, and others — like enterprise technologies that require more due diligence — in four to six weeks at most. Instead of meeting monthly, CommonAngels will now meet every other Tuesday, either in Waltham or Kendall Square.
"We're changing the internal mentality," Heymann says. "It used to be that the angel was our customer. 'I'm the money, so I'm the customer.' But that's B.S. The entrepreneur is the customer, if you're trying to make money." Heymann had previously been a general partner at BancBoston Ventures.
CommonAngels' current fund was raised in 2010, and at that point, the group's members were encouraged to put money into it. (About 40 percent of that money has been invested thus far, Heymann says.) In the future, Heymann says, members will be required to contribute a substantial amount, rather than simply waiting on the sidelines until a business concept compels them to cut a check. The group could start raising its next fund later this year.
The six people sitting on the new investment committee, in addition to Heymann and Geshwiler, are John Landry, Mike Dornbrook, Preston Ford, Paul Birch, Peter Bleyleben, and John Raguin. (Bios here.)
Geshwiler says that CommonAngels' investment focus won't change. It primarily looks for opportunities in software, digital media, and cloud-based services. One of the group's newest members is Tim Curran, who had been CEO of Vela Systems, a CommonAngels portfolio company that was acquired by Autodesk last year.
At a moment when AngelList and micro-VC funds with two or three partners are reshaping the world of early-stage investing, it'll be interesting to see whether these changes are enough to ensure that CommonAngels stays high on entrepreneurs' lists of where they bring their ideas first.
What do you think?
About Scott Kirsner
Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.
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