Funding Process
The NWEA funding process has 8 sequential stages:
- Application
- Screening
- Coaching
- Presentation
- Due Diligence
- Term Sheet
- Syndication
- Final Documents and Closing
Application
Companies that believe they meet the selection criteria may apply online. Applications should be submitted about 45 days in advance of the meeting at which a company wishes to present. NWEA's calendar contains upcoming meeting dates. Meeting dates are subject to change but applicants will be notified well in advance of any changes.
Screening
Applying companies are reviewed to determine whether they meet the selection criteria by members who serve on the Screening Committee. The Screening Committee is chaired by Board of Directors member Bill Lemon.
The 45 day pre-meeting window allows the Screening Committee adequate time to evaluate and select presenting companies, notify them 2-3 weeks in advance of the meeting and provide guidance and coaching so they can “put their best foot forward” during their presentations to NWEA members.
Coaching
One or more NWEA members usually offers to review each successful applicant's pitch and fine tune it for NWEA’s members.
Presentation
All NWEA regular meetings are held in Bellevue, Washington. 3 or 4 successful applicants are invited to make a pitch on a particular meeting date. The time, date and location will be sent to you if you are accepted to present. The format of our meetings is:
- Welcome and general announcements
- Each of 3 or 4 companies make 15 minute pitches, using PowerPoint or other digital presentation software, followed by a 5 minutes question and answer period
- Representatives of all presenting companies are asked to leave the room for about 15 minutes while members discuss their presentations and generate additional questions for each company
- Company representatives are invited back to the meeting and are asked, in turn, to answer more in-depth questions. Each company has about 5 minutes worth of q&a.
- At the end of each meeting, members fill-out a questionnaire form detailing what they think are each presenting company’s strengths and weaknesses. These are later summarized and sent to each company. The form also asks if a member is interested in beginning due diligence. A list of interested members, along with their email addresses, is forwarded to each company.
Due Diligence
Interested members form informal due diligence (dd) groups and share the work involved. Normally, one member takes the lead and is the principal point of contact with the company. During dd, the company will be asked for a considerable amount of detailed information and documentation. DD groups often ask to meet with company representatives. The process varies considerably depending on the members involved, the nature of the business and the complexity of the deal. The process may take weeks or months. Entrepreneurs that have a well-thought-out business plan with milestones and have documented, in advance, the elements listed in selection criteria generally get through dd more quickly than less well prepared companies.
Term Sheet
The dd process usually culminates in an offer to invest that takes the form of a term sheet (which in some cases is offered by the company). It summarizes all important features of the potential deal but is not legally binding. Of course, dd may not progress that far if the opportunity is not sufficiently compelling.
Syndication
If NWEA members do not anticipate funding the entire round, it may benefit the company and investors to syndicate the deal with other angel groups. The NWEA deal lead, coordinating closely with the company, will normally shop the term sheet with other angel groups. NWEA has good relationships with many other angel groups, including Alliance of Angels, Puget Sound Venture Club, Tacoma Angel Network, Bellingham Angel Group, Seraph Capital Forum, Boise Angel Alliance and Frontier Angels.
NWEA participates in a monthly "co-investment teleconference" with a growing list of angel groups in the Pacific NW. During these calls, NWEA representatives describe the deals we are doing and try to generate interest in syndication.
Final Documents and Closing
If investors and the company agree on a term sheet, the company’s or investors' attorneys prepare final binding documents which are signed at closing, when the company receives members’ funds.
