Can metrics help angel groups?

Angel groups only survive because their members invest of their own time and energy. All of us group managers struggle with how to increase levels of activity. More=better.

With our portfolio companies we don’t settle for prose-laden emails and verbal updates… we demand cold, hard metrics.  Metrics force a clear conversation that, if chosen correctly, are a powerful driver of success / indicator of impending doom.  Most of us use metrics to monitor our personal progress in life & business: weight, miles run, calls made, dollars raised, etc.  So can we create some metrics for our members to help them have a clear picture of how much they are helping their angel group succeed?  I think yes.  In fact, we already use some metrics: #deals closed, $’s invested, # of members.  But those are group-specific and miss a LOT of good stuff in between.  What if we tried to…

  • Measure Contribution –  Attend a meeting, run a due diligence effort, attend a conference to scout out deals, recruit a new members… all of those help a group.  So let’s measure them.  Take the time invested, multiple by a billing rate (maybe $500/hr) and call it their contribution.  Let’s define the sum of all contributions from all members of an angel group as the group’s “Valuation.”
  • Communicate It…
    • In every email, and at every meeting, show the “Valuation” of the angel group and how much it has increased over the past 3 months.  This helps remind everyone we are in this together, we are working to grow the group, and are making measurable progress.
    • In every email, and at every meeting, recognize the members who have made the largest contributions to the group’s valuation.  Do it for the top people who have done the most in each important category: dealflow, recruitment, helping portfolio companies, etc.
    • Go beyond recognition and actually give people some simple, but appropriate, gifts as tokens of thanks.  Nothing fancy is needed, accredited investors don’t need gifts.  But all of us like getting them.  These can vary from plaques given out at an annual social event to far simpler things like $5 Starbucks gift cards and group-branded clothing.

Implementation: Everything listed above can be prototyped using GoogleDocs without a line of code for no out-of-pocket cost.  The gifts can be prototyped for <$1000.

As always, thoughts and feedback are welcome.

UPDATE 8/3: Brian Case of Bradway Financial made a great recommendation: expand the startup company metaphor.  Keep Valuation as a measure of total contribution.  But keep going.  If angels are partners in making the group a success, treat them as such.  Issue them “shares” that correspond to their contribution (each share is a dollar, each dollar’s worth of contribution translates into a share).  Then, at each meeting, display the angel group’s cap table – listing all the members and their ownership in the angel group.  Note: no real shares are being issued, there is no legal entity the angel a part of… this is all a metaphor, but one that makes sense to angels.  It reinforces that all the angels are partners in making the venture a success and it makes it instantly clear which angels are making the biggest contributions and who we should be thanking.

Cdling aims to change the face of startup investing.

I recently joined the board of advisors for Cdling.

"Cdling (pronounced "seedling") is a platform that builds trust across global startup communities. We help investors, startups and the experts who support them allocate attention and resources better."

Startup finance, as wonderful as it is, is still LOADED with friction that kills innovation and slows the pace of human advancement. This company has a solution that could dramatically change that. Their use of crowdsourcing techniques has the potential to dramatically change how things are done. To learn more, visit their website.

For those of you who have tracked my blog for a while, you know I was working on ways to incorporate prediction markets into the startup financing world. Cdling is doing that, better than I was! So I’m getting behind them and pushing :).

Lean Startup Template

A few months ago I read The Lean Startup and found its core messages resonating deeply with my own experience. What better a way to do so than to apply the book’s ideas to VVM itself? :). So I gave it a try. Turns out the book was a great read for me, but when I re-read it I saw how hard it is to use as a GUIDE BOOK :(. Neither the book nor inquiries to the Great Google led to a template. So I put my own together that I hope is helpful to others… I am sure it can be better and I welcome any suggestions for improvement. The template assumes you’ve read the book and know the terms… if you are rusty, you can get a quick refresher on the book here.

  1. Target Market – Who is your target customer (and possibly end-user if different) in as much detail as you can.
  2. Leap Of Faith Assumptions– When filling in the below, be sure to detail the core assumptions that underlie your venture. You’ll want to test them later to avoid the problems IMVU had!
    1. Value Hypothesis – What benefit(s) do you deliver that address a real pain/opportunity possessed by your target market?
    2. Growth Hypothesis – Which one of the growth engines (Viral, Sticky, or Paid) resonates most?
    3. Any other core assumptions?
  3. Key Metrics – Given your growth & value hypotheses, what are your key non-vanity metrics and how will you measure them? Are they actionable?
  4. Experiments– Detail a simple set of scientific (or as close as you can get) experiments that will let you test your leap-of-faith assumptions. Be sure to show what metrics you will use, how you will collect them, how you will know if you are right, etc. What is your timeframe? How can you use cohort analysis? How can you use control groups? Specifically detail how you will…
    1. Establish a Baseline
    2. Tune the Engine
    3. Pivot or Persevere
  5. Accountability – How will you make yourself accountable?  Usually people do this through board meetings.  How often should you hold yours?  How do you give your board the tools to aggressively challenge you (in a lovingly critical way)?
  6. Small Batches – How will you incorporate the idea of small batches?
  7. Five Whys – How will you institutionalize the concept of Five whys?

RVI invests in DX Urgent Care (AKA Doctor’s Express)

My angel group completed its first “medium risk/reward” deal, one that has a much lower (we hope) risk profile than a traditional startup, but therefore likely has a much lower upside as well.  Here is a copy of our announcement:

RVI invests in Springfield-based DX Urgent Care
Gary Martinelli leads RVI’s investment  

Gary Martinelli
RVI Deal Lead, Gary Martinelli

RVI is proud to announce our newest addition to our portfolio, Springfield-based  DX Urgent Care (AKA Doctors Express).  RVI Member, and Chairman Emeritus, Gary Martinelli found, sponsored, and lead our exploration of the company.

About  DX Urgent Care: “DX’ Doctors Express is a walk-in Urgent Care Center that is an alternative to the ER for the treatment of non-life threatening illnesses and injuries.”

If you are interested in learning more about this company, please contact Gary Martinelli (

Doctors Express
RVI Portfolio Company: DX Urgent Care (Doctors Express)

A Contrarian view: Geek CEOs rock.

Conventional wisdom is that, generally speaking, geek CEOs are a Bad Idea. Serial entrepreneur and entrepreneurship educator extraordinaire Steve Blank disagrees…

How Scientists and Engineers Got It Right, and VC’s Got It Wrong

Scientists and engineers as founders and startup CEOs is one of the least celebrated contributions of Silicon Valley. It might be its most important…

In the late 1950’s Silicon Valley’s first three IPO’s were companies that were founded and run by scientists and engineers: Varian (founded by Stanford engineering professors and graduate students,) Hewlett Packard (founded by two Stanford engineering graduate students) and Ampex (founded by a mechanical/electrical engineer.)…

Yet when venture capital got involved they brought all the processes to administer existing companies they learned in business school – how to write a business plan, accounting, organizational behavior, managerial skills, marketing, operations, etc. This set up a conflict with the learning, discovery and experimentation style of the original valley founders.

A worthy debate. Full post here.

Pipeline Fund explores “training up” new women angels

Thanks to an interesting NYT article, I learned of the Pipeline Fund, an organization dedicated to helping aspiring women angels become extremely succesful women angels investing in woman-backed social ventures…

The overwhelmingly male field of angel investing is about to become a bit more diverse. Ten women, including some business owners (TechCrunch has the full list), will soon learn the secrets of angel investing during the Pipeline Fund Fellowship’s inaugural six-month program for aspiring female angels.

There are far too few women in angel investing and far too little mentoring of new angels. This sounds like a fascinating experiment. And what’s more, some time as passed since the original article and a new article reports on progress.

Good luck Pipeline Fund!

Angel Investor Asks Google+ Users to Select His Next Investment

This isn’t how I would recommend you use crowdsourcing to help your portfolio, but interesting none-the-less…

A Monaco-based Angel investor has asked users of Google+ to vote for their favourite Web-based start-up that publishes their pitch on Google Plus, and he will invest $10,000 in the most popular.

Full Story: