OregonStartups.com News

Y-Combinator: micro-funding, advice & networking for 6%

A recent Mercury News article provides an update on the Y-Combinator, which now has seeded more than 80 startups.  Of those, 59 are still "plugging away".  Here's the Y-Combinator deal:

Participants say Y Combinator's social milieu, including deep ties to venture capitalists, attracts them to the program. Certainly it's not the money - just barely enough to cover living expenses for three months. The current group received $5,000 for each partner and $5,000 for the business plan - amounts that most could self-finance or get from family or friends. But being selected for YC, participants say, represents a form of validation that bootstrapped projects lack.

Y Combinator retains an equity stake in the start-ups, averaging 6 percent, said YC partner Jessica Livingston. If that seems like a sweet deal for YC, entrepreneurs aren't complaining.

The state or Oregon should consider funding this kind of "micro funding" program (the Oregon Growth Account?)  And a 6% stake is something that we in the local incubation business might want to think about (I say "we" since OTBC is my day job).  But of course, for an entrepreneur to hand over a 6% stake, he or she has to believe the incubator will truly make a difference!  Y-Combinator seems to have made the grade.

Early Stage Investment Forum: March 7 deadline

Just a heads-up: the deadline (March 7) is coming up fast for the Early Stage Investment Forum.  It will be held at the Washington State Convention & Trade Center.

Northwest Angel Groups

The Seattle Post Intelligencer published an article listing Angel Investor Groups in the Northwest this week, with (for some of them) information on their process and the cost to apply.  The list included:

Alliance of Angels
Bellingham Angels
Boise Angel Alliance
Keiretsu Forum (Seattle Chapter)
Portland Angel Network
Puget Sound Venture Club
Seraph Capital Forum
Tacoma Angel Network
Zino Society

She also mentioned the upcoming Northwest Entrepreneur Network's upcoming Early Stage Investment Forum (note: application deadline is March 7 !)

Some of the Oregon groups that she didn't mention:

Oregon Sustainability Angels
Keiretsu Forum (Portland Chapter)
Portland Venture Group
Womens Investment Network

I believe there are angel groups also in Corvallis, Hood River, and Central Oregon.  If anyone has more info on those (or any other angel groups in the Northwest), please post a comment!

Friends and Family Funding

There are arguments for and against using Friends and Family financing.  A recent San Jose Mercury News article talks about the advantages .

2007 was a Big Year for the Keiretsu Forum

According to the Seattle Post Intelligencer, the Keiretsu Forum in the Northwest more than doubled it's investments in 2007 compared to 2006:

The three-year-old group, with 154 members in Seattle, Portland and Boise, invested $17.4 million in 35 companies.

That compares with about $6 million invested in 2006. The Alliance of Angels, a non-profit investment group supported by the Technology Alliance, also just released 2007 numbers, with chairman Dan Rosen calling it a "blowout year." The 10-year-old group pumped $3.9 million into 44 companies.

With luck, more of the Keiretsu's investments this year will go to Portland startups, thanks to the newly formed Portland chapter.

Angel Investing ROI

Rob Wiltbank of Willamette University and Warren Boeker of the University of Washington, sponsored by the Angel Capital Association and the Ewing Marion Kauffman Foundation, scrutinize more than a 1100 exits by 539 angel investors to discover an average return of 2.6 times their original investment in just 3 ½ years, amounting to an impressive IRR or 27%, rivaling even the most successful venture capital firms.  Read more.

Cookie Cutter Docs for Angels

Some companies don't need a lot of angel investment -- and in those cases there's a danger that the legal fees involved in structuring the documents could consume a large fraction of the investment. Hence the idea of standardized documents with very low cost legal fees, as described in this TechConfidential.com story.

New Fund Invests $205K in Elemental Technologies

The Portland Business Journal reported that the Oregon Angel Fund (OAF) has completed its second investment -- a $205K investment in Elemental Technologies, a company that will provide technology to video broadcast companies. The company was started 3 former Pixelworks employees.

The OAF's first investment was in Lumencor, a provider of light engines for biological testing equipment.

Angel Investing Down in 1st Half (or not...)

The Center for Venture Research reported that in the ifrst half of 2007, total investments were $11.9 billion, a decrease of 6% over one year ago. On the other hand, a survey by the Angel Capital Association found angels believe they are on-track to meet predictions of increaseed investment activity i 2007.

Lumencor Closes Angel Round

The Portland Business Journal reported in today's paper edition and in an online story that Lumencor, maker of semiconductor-based light source products -- has closed a $197,000 investment, the first investment made by the Oregon Angel Fund. Lumencor is a Venture in Residence at OTBC, the technology incubator in Beaverton.