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Angels Among Us

What does it take to be among these investors?

Article by Bree O'Brien

Photography by Courtesy of interviewees

Originally published in Bellevue Lifestyle

Have you ever considered angel investing? The US Securities and Exchange Commission defines angels as “generally high-net-worth individuals who invest their own money directly in emerging businesses.” (sec.gov) They’re primarily accredited investors with a sole annual income over $200K, or income with a spouse of over $300K, or $1 million+ in net worth, excluding primary residence. 

John Sechrest, Founder of the Seattle Angel Conference among other ventures, tells Kirkland Lifestyle that about 15% of area households are accredited investors by law, but less than 1% of those actually invest in early stage startups. Now in its 13th year, SAC is a learn-by-doing cohort based class that was established to create new angel investors. Sechrest says, “It’s more about the chemistry lab class than it is about the chemistry lecture. A key learning for attendees is ‘What things are important to me about making investments? Am I interested in unicorns or clean tech, or helping my friends?’ They really need to come to clarity on that, so we put them on the road to that.” 

Around 700 people have participated in the conference as investors, and all of the Seattle-area angel groups include SAC alumni. In SAC, each investor contributes $6K into a common fund, held in an LLC. Startups that have applied to and been accepted to the conference make their pitches to investors, and the three-month process culminates in those investors deciding which companies they’ll invest in with the fund. Austin Brovick, a SAC24 Fund Organizer who has participated in the conference four times, says, "One great part of SAC is the extensive network you build over the few months. Many of the Seattle-based angel groups have SAC alumni, so it's a great way to get an introduction to the angel investing ecosystem in Seattle." 

Brovick joined SAC as a future entrepreneur who wanted to know what investors are looking for in a startup, and to build a professional network. The self-study, workshops, and conversations with other participants helped him feel more confident in his progress toward starting his own company in the near future. “If you have the income to be an accredited investor, it’s pretty low barrier to get your feet wet. It’s $6K to start, and you get a lot of bang for your buck, like paying for a college course with the chance you’ll make money,” Brovick says.

As far as demographics, nationally the percentage of female angel investors is about 23%. “We average, in our program, 33% women, and we have an explicit effort to get to 50/50,” Sechrest says. He also mentions that African American and Hispanic people are underrepresented in angel investing. A “sponsored investor” program is designed to help facilitate underrepresented groups’ participation in SAC by providing opportunities to gain knowledge about the process before committing any funds. 

Yoko Okano, Founding Partner of First Row Partners and SAC alumni, says “In my first round of SAC, I was one of 4 or so women in a room of 35 angel investors. During a subsequent round of SAC for which I served as a fund manager, we started an upwards trend towards 40-50% female investor participation. That round, we also noted an increase in female founder applicants.” According to Okano, Sechrest was instrumental in encouraging her business partner and herself in their investing journeys. “SAC is a good starting point because the process allows you to see more deals at a faster pace than you could as an individual investor starting out. We’re in such a special place in a talent and capital perspective. We have so many of the ingredients here in Seattle.”

“In my mind, some portion of anyone’s philanthropic activity should be angel investing with a mission,” says Sechrest. “The driving thing is: How do you want to see innovation make the world better? Whatever the answer is for you, you should build your thesis for investing around that. If you and 20 of your friends align on that, you can be transformative for a number of companies; that will not only change the companies’ arc, but will change your community’s arc.”

Sechrest emphasizes, “Everywhere, there are startups. There are founders that are curious and trying things, but how do you get them out of the garage? Well let’s put money on the table to get them out of the garage and into the community.”

To learn more about Seattle Angel Conferece, visit seattleangelconference.com.

John Dex

Angel Investor and Startup Advisor

Seattle Angel Conference has been a spawning ground for new angel investors in our region for over a decade. As I left my work as a tech product manager and startup operator, and explored getting into angel investing, practically everyone I spoke with told me to start at SAC. I've found SAC alums all over our PNW ecosystem. And I'm proud of being a part of SAC as a 3 time investor and 1 time fund organizer (SAC 21). 

I decided to become an angel investor for two reasons: I love the energy and intellectual energy of tech startups; and, I wanted to add a "high risk/high reward" asset class to my investment mix. Startup investing, done properly with diversification and methodical due diligence, has shown to deliver IRR returns above 20%. 

“In my mind, some portion of anyone’s philanthropic activity should be angel investing with a mission,” says Sechrest.

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