Growing the Local Tech Investor Community

Last week, I was talking with a successful tech entrepreneur regarding ideas to expand the local tech investor community. This encompasses both angel investors and limited partners interested in investing in local venture capital funds. It’s a topic I’ve been contemplating and discussing with ecosystem leaders for over 15 years. There’s no easy answer.

The crux of the issue lies in the fact that the majority of wealthy individuals in the community accumulated their money through ventures outside of tech startups. Consequently, tech startups are often perceived as unconventional and risky financial investments – a perception that is not entirely unfounded. After all, it’s rare to encounter an industry that assesses valuations based on revenue multiples rather than profits. Moreover, the illiquid nature of tech investments means that a considerable amount of time (usually 10-12 years) elapses before any financial return, in stark contrast to real estate or stock market investments.

So, what are some potential ideas to address this challenge? Here are a few suggestions:

1. Casual, Monthly Angel Investor Group: Organize a simple and informal angel investor gathering on a monthly basis, where a local service provider can sponsor food, and entrepreneurs can pitch their startup ideas. The goal is to create a regular event that brings current and aspiring angels together (similar to the concept of Angel Lounge).

2. Formal, Monthly Angel Investor Group: Establish a more structured angel investor group where local angels commit to an annual investment amount, pay dues, set up committees, and follow a more organized approach. Typically, such groups involve more active participation and consist of a larger membership (like ATA).

3. University-Connected Alumni Angel Investors: Develop a network of angel investors who exclusively invest in startups affiliated with universities, including students, faculty, and alumni. Host regular events and pitch sessions, particularly during homecoming and alumni weekends (see Duke Angel Network).

4. Mix and Mingle Across Angel Investors: Bring together various angel groups a couple of times per year for networking and mutual learning. This could involve casual angels, serious angels, university-affiliated angels, and others.

5. Occasional Events for Local Venture Fund Limited Partners: Organize panel discussions with 2-3 local venture funds to educate potential limited partners about the role and focus of each fund. This aims to offer education and access to potential local limited partners.

6. Invite Potential Investors to Local Venture Fund Annual Meetings: Encourage potential limited partners to attend annual meetings hosted by venture funds. These meetings often include partner perspectives on the market, guest speakers, portfolio entrepreneur presentations, and networking opportunities – an ideal platform for deeper engagement with the fund.

Growing the local tech investor community by attracting more angel investors and limited partners to local venture funds is a challenging and never-ending process. The most effective approach involves fostering successful startups that lead to lucrative exits, thereby generating local wealth. However, the next best thing is steadily expanding the local tech investor community with a multi-decade horizon. The best time to start is now.