Shannon Henry's The Download Live
Discussion with Kyp Sirinakis of Women Angels.net
1 p.m. EST: Thursday, February 10, 2000
This week my guest will be Kyp Sirinakis of Women Angels.net. Many entrepreneurial feel they have been largely left out of the riches and excitement of the technology boom. Now, a group of Washington's wealthiest and best-connected women are getting in the game by creating their own "angel" investment group.
The members of Women Angels.net, who believe theirs is the country's first all-female angel fund, are raising an initial $5.25 million to be used as seed money for new ventures, primarily in high technology.
Join us Thursday at 1 P.M. and ask Kyp about the fast-paced world of venture capitalists, where opportunities exist for women and just how long the current tech boom will last. Please submit questions early
Welcome Kyp! Could you start off by telling us how the idea for Women Angels.net came up?
Kyp Sirinakis: Hi Shannon and everyone. Thanks for having me online today. The idea for WomenAngels.net was developed by the founders of the Women's Growth Capital Fund. When they raised the fund, one of the goals was to get more women involved in venture capital. 70% of their investors are women. As the market in the area picked up, there became an opening to move into the club arena and to get more women involved in the angel capital process. So we looked around for the best model and decided to collaborate with John May who runs the dinner and e-media clubs here locally. The rest is history.
I read an article about your group recently and it sounds exciting. May I ask why one has to have a net worth of a million dollars to be a part of your group? I think each member has to put in about $75,00, but I think that one needn't be a millionaire to contribute that sum. If the base of your membership is broadened, you may reach your seed money goal faster. Also, do you have to be 'well-connected' to be a member? and how are members selected?
Kyp Sirinakis: The requirements for joining comes about because of SEC requirements. Many later stage financing rounds need accredited investors at the table. In order for us to be a value added investor and to participate in current rounds, we needed to assure that all of our members were accredited. We like to encourage others to get involved in the angel process and are working on a variety of mechanisms to do just that.
What will be the typical investment amount that your venture group will fund?
Will it be national or only local ventures?
How any people are in your organization?
Kyp Sirinakis: WomenAngels.net will typically invest between $300,000 to $750,000 in a round. We co-invest with VC's, other angel groups and super angels. We look for early stage companies raising their first institutional round. Typically there will be other angel or friends and family money in the deal. We look for deals in the local area - Baltimore, DC, Richmond, Charlottesville etc - basically drive time so that we can be a value added investor.
How involved will each angel be in the deals? Will you assign women with particular experience in finance, or telecom, for example, to specific deals?
Kyp Sirinakis: WomenAngels.net uses an active model. We encourage each member to participate throughout our primary investment period. We'll match up members with companies that meet their specific area of expertise or industry background to take part in the due diligence process. We believe the strength of the club as an investor comes from our members - they are a fantastic group of women and men that are leaders in their fields.
I know several women in the DC-Virignia area who are very capable entrepreneurs and have some great business ideas, but they might not know how they should initially approach a group like Women Angels. How should a woman entrepreneur go about initiating contact, and what kinds of dollar amounts are you looking to invest?
Kyp Sirinakis: First of all, let me stress that we are not investing in only women-owned deals. We are seeking high growth companies to invest in. The best way to approach us is to send your executive summary to me for review (firstname.lastname@example.org). Soon you will be able to submit your executive summary through our Web site, but it's currently under construction.
Since writing the story on your group, I've gotten so many calls from readers asking how to join. Are you still taking members? What's the reasoning behind the size of the club? And will you launch a second one?
Kyp Sirinakis: We have had an overwhelming response from the community about joining the group - both before and after the fantastic article Shannon wrote. Currently the club is closed but we are taking people's information that are interested and we will keep them informed of future offerings that we might launch. The second one.. well, we're talking about that internally. We've obviously tapped into a great unmet demand and we hope to work with as many women as possible.
We basically backed into the size of the club. We knew we wanted at least a $5million fund (also for SEC purposes) and we wanted to keep the group at a manageable size. One of the great things about the group is the opportunities it presents to its members and portfolio companies to increase their network, learn together and get involved.
We are a small, women-owned business with tremendous potential. What kinds of internal systems, strategies do venture capitalists look for in making decisions about investing in small, but growing, companies?
Kyp Sirinakis: Remember in real estate people say the key is location, location, location... well in early stage investing it's management, management, management. After that we look for compelling strategies with an opportunity to be a leader in a market; growth potential; competition and the scalability of the idea; strong financials and a clear exit with an appropriate return. Not too much to ask for??
Why aren't more women involved in angel investing or venture capital? What are the roadblocks?
Kyp Sirinakis: What we've found is that many women haven't really been exposed to angel investing. Often women have not been in the same circles and have not been in the position to invest. In the past, women haven't been at the point in their lives and careers to be able to afford -both time and money - to participate. As more and more women cash out of their companies, rise to the tops in their respective fields and get exposed to this type of investing, they will make a tremendous contribution to the community and the companies they participate in.
As you know some people don't like the idea of women-only organizations. What are the benefits? Why not just encourage women to join other angel groups?
Kyp Sirinakis: As the first club focused on women angel investors, we fulfill a need in the marketplace. Some women who are use to, successful at, and quite comfortable in predominately male organizations or groups (which of course is changing too)find a predominately women's group such as ours brings a different perspective to their lives. It's not better of worse, it's just different.
Since one of our goals is to get more women involved in angel investing, we believe that the splash we have made about angel investing actually will bring the opportunities to the forefront for many of them.
Hello Kyp. I am pondering starting a technology-based business, but I need the training first. From there I would like to work, get some experience and contacts, then branch out on my own. This would involve learning networking systems, etc., then going on from there to starting my own company setting up and maintaining these systems. Does this sound like a good plan, and if not, what would you suggest to someone who wants a piece of the pie?
Kyp Sirinakis: The best thing you can do not only for yourself, but for your future business prospect, is to find something you love and are interested in. Then, make sure you work in the field to learn the ropes. If you can see as many aspects of the business as possible by working with someone else first, it will be a tremendous value to you.
Then, make sure when you are starting your company, pick a solid team and don't forget the marketing person at the beginning. I've seen a great number of fantastic technologies come out whose founders haven't thought too much about the marketing.
The group will arguably be the most powerful women networking organization in the city. How do you think the network will evolve? Besides the investments, do you see these women working together in other ways?
Kyp Sirinakis: Keep in mind though that we're out to make money - first and foremost. But obviously, the connections that these women will make will be tremendous. We've brought a group together who in many cases don't know each other but have synergies. We meet monthly and as managers we will make a concerted effort to "work the crowd" to assure people are meeting each other and finding ways to work together. As the members are involved in smaller due diligence teams, this will also provide a less formal, more inimate way to get to know each other.
Have you had interest in other cities from people wanting to start similar groups? Or would you consider starting a network of networks, so to speak?
Kyp Sirinakis: We've already had request for information from people in all parts of the country. We will be exploring different opportunities and models to create beneficial relationships and experiences. The key to these networks is to have people in the community who have connections, know the industry and have access to deal flow.
We started with a great model and a solid foundation. We've learned a lot along the way that will be beneficial to others starting clubs.
Kyp, tell us a little about yourself. How did you become the manager of this group?
Kyp Sirinakis: Well, I'm one of those people that keep re-inventing themselves. My background is in finance with a mix of operations and strategy. I used to be the CFO at a biotech company here locally where I raised about $16 million in a private placement and worked with a great venture capital group. I then moved to run the Technology Resource Alliance at GMU - an "incubator without walls" if you will. There I worked with several fantastic technology companies and mentors in the community. I decide to work on my own for a while and helped several angels and private equity firms in the "deal" game. The opportunity here just fell into place and fit with my background. I clicked with the team here and decided to join.
How long do you anticipate that it will take until you fund the first venture?
Kyp Sirinakis: We are actively looking at companies now. Our first meeting is at the end of this month where we will have two companies presenting to the club. We have a few of them that really look promising.
We have a two stage process - the members first decide whether to proceed with due diligence. If so, a team is formed and we take a deeper look at the companies. The committee comes back to the membership, typically at the next meeting, and gives a report with a recommendation. The members then decide whether to proceed with an investment or not.
So the process could take a couple of months. But we recognize that in many cases we are coming into deals that already have a term sheet on the table - that's the nature of the game. We have mechanisms that will allow us to move the process along faster if necessary. It's important though that the members feel comfortable with the process and the decision.
As you've gone through the fundraising process and are now entering the part where you'll see deals, what have you learned about setting up an investment club? What has surprised you?
Kyp Sirinakis: What surprised us was how quickly it all happened - from start to finish it was a little over 2 months. We obviously tapped into an unmet market.
The other interesting aspect to this was the viral marketing phenomenon. We started with a core group of women and had a couple of breakfasts. They referred friends, who referred friends and so on.
In forming the club, we confirmed that, just like when we invest, people invest in people. The members had to get comfortable with our management team and the "profile" of the other members in the group. This is pure risk capital!
What kind of financial return are you expecting on the investments?
Kyp Sirinakis: The general rule of thumb for this kind of investment vehicle is three to five times your investment in three to five years. Like all portfolios, I'm sure that we will have some big winners and some not so big. Obviously we can't make any guarantees on returns. We are in a good place and a good time to be starting this club. The region has a great number of high quality deals and talented leaders. We're even starting to see serial entrepreneurs. The venture money has arrived and the angel community is getting even stronger and more efficient.
We look forward to creating a solid portfolio so that our members can participate in and add to some of the regions successes.
To wrap up, what advice would you give to women who would like to get more involved in business and finance, but might not be able to afford joining a club like this?
Get involved in the community - there are a number of great organizations in the region that can provide valuable information and an entire into this type of investing. Try the Private Investor's Network, the Netpreneur Program, the MIT Enterprise forum and the Baltimore-Washington Venture Group. And of course, keep an eye on us and our Web site - we hope to be able to work with as many women angels as possible.
Thanks Shannon for having me. I've enjoyed it.
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