The Angel View on San Diego’s VC Landscape: Q&A With Tech Coast Angels’ Mayer and Elconin
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in the jockey, not the horse, and getting to know the entrepreneur(s) is a necessity. Even with modern communications there is no substitute for a few face-to-face meetings.
X: Do the Tech Coast Angels have a role to play in this scenario of disappearing San Diego-based VCs? If so, what is it?
RM: There is a trend among angel groups to do deal syndication, where multiple angel groups from a region, or even from around the country, invest in a single deal. It’s of particular interest to angel investors from areas of the country that do not have a lot of local innovation in equity-appropriate companies. Angel syndication may be the long-term replacement for some of the loss of local VCs, but it is taking time to figure out how to get it done across disparate geographies.
ME: In addition to syndicating with other angel groups, we’re joining in some deals with corporate investors, enabling the funding of larger deals.
X: What are you seeing in overall VC activity, including out-of-town VCs ? Are angels picking up the slack?
ME: No numbers, sorry, but I believe that we have a relatively healthy flow of VC dollars into our portfolio companies.
My impression is that San Diego has continued to grow as a “hotbed of innovation” and hence has held its own though all this. But the lack of local VCs definitely hurts. The best deals will always find financing, but it is easier for a local investor to find, poke at, and fund a local deal. More local VCs would improve our local innovation engine.
RM: I did take a look at some of the investment data I have access to—particularly the Southern California database of deals. However, I think the only conclusion one could draw is that their deal tracking in the past few years is much better than their deal tracking in the early 2000s. I was hoping to see something about the percentage or source of first-round deals over the years, but it’s obscured by the increase in their ability to track deals.
Face time with the entrepreneur seems to be a necessity in getting investors to write checks. At the Tech Coast Angels, we have found that investors rarely invest unless they have had at least two face-to-face meetings with the company, and we have structured our processes so that now we don’t bring in a company unless we can plan for multiple presentations and interactions. So we are back to the conclusion that having local investors really does facilitate early-stage investment.