I know I owe everyone a follow up to my post from last week titled The Proliferation of Standardized Seed Financing Documents.  To the many of you out there that emailed me in response, thanks for all of the thought, ideas, suggestions, and offers of help.  More on that soon.

In the mean time, I noticed today that Dow Jones is running a seminar titled Negotiating an Angel Deal: What Angels, Entrepreneurs & VCs Need to Know.  My partner Jason Mendelson is one of the panelists, along with several other notable lawyers and angel investors.  If you are interested in this particular topic, I expect there will be a “robust” discussion as I know that the opinions between a few of the folks on the panel vary pretty widely.  If you are interested, sign up here.

When I wrote my post titled An Angel Investor Group Move That Makes Me Vomit I expected to write my little rant and be done with it.  A month or so later Jason Calacanis picked up the mantle and started a Jihad against the idea of angel groups charging entrepreneurs to pitch to them.

The result is the Open Angel Forum.  I participated in the second event last week in Boulder.  I thought it was spectacular and the twitter stream from #OAFCO reflected this sentiment.  About 20 active (at least four investments in the past year) early stage investors (angels and seed stage VCs) attended.  Six entrepreneurs presented their companies in short seven minute pitches.  Five sponsors underwrote the food and drink at the event.  There was plenty of networking before and after.  That was it – small, intimate, and highly relevant to all.

Most of the presenters wrote blog posts about the event which will give you a great feel for what they experienced.

• Odojo – My Experience presenting at The Open Angel Forum
• FaceFile – Open Angel Forum Colorado
• Grogger – OAF: Things Getting Better for Entrepreneurs
• TeamSnap – TeamSnap presents at Open Angel Forum
• Kijubi – Kijubi @ Open Angel Forum in Boulder Colorado

The events continue with Open Angel Forum San Francisco on March 4th and Open Angel Forum New York City on April 8th.  If you are an entrepreneur or an angel investor in either city, check them out.

The Open Angel Forum is coming to Colorado and having it’s first event in Boulder on 2/3/10.  David Cohen – the CEO of TechStars – has written an extensive post titled Open Angel Forum – Colorado bound! which includes all the background leading up to this, along with information about:

1. Attending OAFCO as an angel investor
2. Presenting at OAFCO as an entrepreneur
3. Sponsoring the event if you are a service provider

Each event will only have 10-15 angels in attendance – all will be active investors.  We’ll have five companies presenting.  It will be an intimate event – if you want to get a feel for the chatter check out the twitter stream on Open Angel Forum take a look at Mark Suster’s post on the Inaugural Open Angel Forum.

I’m made angel investments in over 75 companies since 1994 and had a number of magnificent outcomes including NetGenesis (IPO), Critical Path (IPO), Harmonix (acquired by MTV), and Nutrisystems (IPO).  Yeah – plenty of my angel investments haven’t gone anywhere, but in all cases I’ve had an awesome time working with entrepreneurs to create amazing new companies.

My relationship with David Cohen and TechStars has reinforced this for me as I’ve seen many of the young TechStars companies raise money from angels, go on to raise money from institutional VCs, or be acquired.  I’ve also seen a renaissance in the super angel category with folks like Jeff Clavier at SoftTechVC, Chris Sacca, Dave McClure, the First Round Capital guys, Ron Conway, and David Cohen start to “institutionalize” this category.

One of my deeply held beliefs is a key part of the role of an angel investor is to help the entrepreneur – and operate in support of the entrepreneur.  I’ve always despised the “pay to pitch”schemes that some angel groups have (where the entrepreneur has to pay to pitch) and wrote a post titled An Angel Investor Group Move That Makes Me Vomit. This started a bunch of noise around this issue which Jason Calacanis amplified – resulting in him creating the Open Angel Forum.  I count myself as a proud supporter of this effort and co-collaborator in OAFCO with David Cohen.

If you are an angel investor in Colorado, send David Cohen an email and come help us support new entrepreneurs. If you are an entrepreneur in Colorado looking for angel investors, apply to come to the first OAFCO event.

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Yesterday I had a good conversation with Nivi, the co-author of the great Venture Hacks blog.  He recently added me to AngelList, a directory of angel and seed investors that Nivi curates.  Our discussion covered a variety of things, including trying to define the parameters that qualifies someone to call themselves an angel investor.

Historically, I’ve always said that someone can call themselves an angel investor only if they actually make angel investments!  I’ve been exposed to many “angel investors” who have actually never written a check for an equity investment.  These non-angels come in many shapes and sizes and often end up either offering to become “advisors” for equity (or worse – a retainer), “brokers” (where they help you raise money for a percentage raised), or employees (where the end up trying to get a job).  Now, there is nothing wrong with this, other than them presenting themselves as “angel investors.”  Oh, and some people just like to be in clubs with other people who presumably make investments hang out.

My historical viewpoint was an angel investor is defined as someone who makes at least one equity investment in a seed or early stage company each year of at least $25,000.  So, if an angel investor has been investing for four years, they have at least four separate investments of at least $25,000 each for a total of at least $100,000 invested.  Basically, if you can’t (or don’t) invest at least $25,000 per year, I don’t think you should call yourself an angel investor.

As we worked through the StartupVisa stuff, we realized this wasn’t a high enough threshold for the type of angel investors we thought should be able to sponsor a Startup visa.  So, we came up with the definition of a “Super Angel.”  A Super Angel is an angel investor who has been investing for at least three years and has made at least two equity investments of at least $50,000 each in each of the three years.  This is a total of at least six equity investments totaling at least $300,000.  Most of the people I consider Super Angels are substantially above this threshold.

What do you think of these definitions?  Too strict or too loose?  Any other thoughts on how to qualify someone as an angel investor?

A few weeks ago I wrote a post titled An Angel Investor Group Move That Makes Me Vomit.  In the post, I lambasted the practice of charging entrepreneurs to pitch to an angel group for funding.  I think this is completely backwards – the angel group members should cover all the costs and the entrepreneurs should not be charged.

Last week David Cohen (the founder of TechStars) wrote a post titled An offer to Funding Universe.  On 9/30, Funding Universe is having one of their CrowdPitch events in Denver.  The were originally charging $125 to present – David welcomed Funding Universe to Colorado and offered to pay the presentation fees for half the companies if Funding Universe covered the other half.

Funding Universe responded to David’s offer by having the Pitching Fee Removed!  Nice job guys.

I’ve personally made around 75 angel investments during two periods of time – 1994 – 1997 and 2006 – 2007.  The first was the period of time after I had sold my first company but before I co-founded what become Mobius Venture Capital.  The second was between the end of the “investment period” (the time when we could make investments in new companies) for the Mobius Venture Capital 2000 fund and when my partners and I raised our first Foundry Group fund in the fall of 2007.  Per my agreements with my limited partners, I can’t make angel investments during the time period that I have an active fund in the market.  So – I’m “out of the angel investment business” (although I can make a follow on investment in any company that I’ve made an investment in.)

I give you this background so that my statement below has some credibility.  I think it is grotesque that an organized angel investor group would charge an entrepreneur to present to their members. This is in response to the article I read over the weekend in the New York Times titled Angel Investors Become Less Available where this practice is described.

While there are some good and useful angel groups, there are plenty of bad ones.  And many of the members of organized angel groups aren’t actually angel investors.  I’d like to suggest that to “qualify” as an angel investor, you have to have made at least one equity investment of at least $25,000 in the past 12 months.  If you haven’t done this, you can’t call yourself an angel investor.

Now, I realize that running an “organized angel investor group” costs something > $0, but the number shouldn’t be very much.  And – the cost of this should be born by the angel investors that are members of the group, not by the entrepreneurs.  Does anyone else out there think having the entrepreneurs underwrite this is absurd?  It’s just completely backwards in my opinion.

I have an incredibly high regard for a number of angel investors that I’ve gotten the chance to work with – both as an entrepreneur, angel investor, and VC.  The great ones know that their purpose is to help entrepreneurs get up and running with a secondary goal of a long term economic return.  But – the economic return can’t possibly be there unless you are an active angel investor (e.g. your chance of having economic success by making one angel investment over your angel investing lifetime is extremely low – more about this in another blog post.)

In the mean time, I’d like to encourage any angel group that charges entrepreneurs to present to them to reconsider their position.

My affection for the amazing games from the gang at Harmonix crosses several boundaries, including the well revered financial one.  As an angel investor in Harmonix, I bow down and worship before my entrepreneurial rock gods.

I’ve been waiting patiently anxiously for Harmonix’s new game "Rock Band" (preorder your copy on Amazon: Rock Band – Xbox 360 or Rock Band – PS 3 and help feed this blogger.) 

I’ve seen the Youtube videos and the demo reel.  But the real test was the Boston Globe review which was printed today at Rock Band passes test with real musicians – and amateurs.  They should have hired me to write the headline – it would have been "Rock Band Rocks."

November 20th is almost here.  Amy is going to thank me for that PS 3 I bought recently.  And – no Ross – I still can’t get you a prerelease copy.  You’ll just have to wait.

Longtime angel investor Bill Payne has a new book out called The Definitive Guide to Raising Money from Angels.  I read it last week and it’s excellent – if you are looking to raise an angel round it’s worth ever dollar of the $37 that Bill charges for it.

I first met Bill in the mid-1990’s when we were both working with the Kauffman Foundation for Entrepreneurial Leadership – I was an entrepreneur-in-residence and he was an executive-in-residence (both fancy titles for “consultant.”)  We worked closely with Jana Matthews in her “Learning Programs for High Growth Entrepreneurs” project, were deeply involved in the YEO / Kauffman Foundation relationship, and helped with the launch of the original Entreworld site (now eVenturing.)

Bill has been an angel investor in a handful of companies that I have been involved in (both successes and failures.)  I’ve always found him to be a thoughtful, helpful, and decisive angel investor.  He knows when he can help and when he can’t – and jumps in with both feet when he can. 

I’m glad Bill has spent the time putting together a book on his thoughts and experiences regarding angel investing.  So much of the stuff out there is garbage and many of the “experts” are really promoters looking for a quick buck on the back of an entrepreneur.  While there are loads of excellent angel investors, Bill is one of the few credible thinker / writer who is also an active angel investor.

On Friday, I did a podcast with David Cohen and Kimbal Musk on angel investing.  David and I have done a few angel investments together (Solidware Technologies and ClickCaster), I’ve got a long history of angel investing (over 50 since 1994), and I’m an investor in Kimbal’s new company Me.dium (part of my “dynamics of information” theme.)  Plus – we did the podcast at The Kitchen – my favorite restaurant in Boulder – which happens to be owned by Kimbal and was previously the location of some of my “for-profit philanthropy” in the form of a previously failed restaurant called Triana (once hot – now not.)  So – there was plenty of “angel karma” in the room as we talked.

David’s show notes do a good job of summarizing the podcast, as does Scott Converse’s post Is Angel Investing good? (Scott is the CEO of ClickCaster.)  My favorite line is that some angel investment is like “for-profit philanthropy.”  Fortunately – a number of the angel investments that I’ve done – including several with my good friend Will Herman – have been successful – making all the for-profit philanthropy ones nice tax writeoffs.

If you are an entrepreneur looking to raise angel money, or an angel investor, or someone considering being an angel investor, I recommend a listen to the podcast.