Quitting a stable job in a tight economy and selling all your belongings to start a business while you have a wife and young children to support is a risk most wouldn’t take. But it was one that was worth it for Naithan Jones.
He is the founder and CEO of AgLocal (www.aglocal.com), a company that aims to revolutionize the meat industry by playing matchmaker between consumers and small producers of responsibly raised meat, wholesalers, and retailers. His idea for an agricultural tech firm managed to raise $1.5 million in financing from angel investors and venture capitalists, with the 2011 startup valued at $6 million.
The 38-year-old innovator made the leap from a manager at the Kauffman Foundation to an entrepreneur, and as with the majority of companies, initial seed money came from family and friends. And like Jones, many early-stage business owners are seeking angel investors to fill in the gap in startup capital.
An angel investor is a private individual with a high net worth who helps capitalize an entrepreneurial endeavor. Historically, angels have been a primary source of seed and startup capital for entrepreneurs, investing in companies in exchange for equity ownership. Funding by angel investors reached $22.9 billion in 2012, reports the Center for Venture Research at the University of New Hampshire. Angel investors funded 67,030 ventures during that period at an average deal size of $341,800.
Although angel investors are located all around the world, they aren’t necessarily easy to locate. Most entrepreneurs find angels through word of mouth but some are finding more effective ways of meeting private investors. This includes participating in venture accelerator programs, joining angel networks or forums, and entering elevator pitch competitions.
Jones’ initial fundraising efforts through family and friends netted $48,000. He used that money to cover living expenses and to pay his first employee. In securing his second round of funding, what prepared him to present investors with a solid pitch was his spring 2012 participation in NewMe, the three-month startup accelerator/incubator specifically designed for minorities in technology. The Silicon Valley-based program helped Jones fine-tune his business plan. Taking part in NewMe connected Jones with investor and tech magnate Ben Horowitz of Andreessen Horowitz , among others who invested $1.5 million in AgLocal.
Pitching to potential investors was daunting and arduous for Jones.
“I had a community of advisers hammering me every single day,” he says. He closed his second round of fundraising in about six weeks. “I must have pitched over 200 times, and I was in about 65 rooms in front of angels and venture capitalists.”
Source: Black Enterprise