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ATA is trying out a new “Summer Schedule” in 2008. Many of our investor members vacation early in the summer and others have extended families they spend time with during the summer months. So, to accomodate both the ATA members and the Atlanta entrepreneurial community, we’ve put together twice monthly “Summer Lunches” in June, July and August. (These lunches will be in addition to our June “educational” meeting and our regular August meeting.)

We will meet in the ATDC BOD room at 75 Fifth Street (where the ATA office is located) from 12:00-2:00 pm on each of the below dates and will have two companies visit, have lunch, and tell us more about their company and management. No specific requirements for the companies beyond being technology oriented, located in Georgia and and an early stage opportunity.

Lunches are free for members and companies and will be supplied by ATA.

Here is the 2008 Summer Schedule:

June 12 - Full

June 24 - Open

July 10 - Open

July 23 - Open

August 7 - Open

August 21 - Open

If you are an entrepreneur, investor or company interested in attending, just drop me an email. I’m actively filling the schedule, so let me know!

Lots of talk lately in the Atlanta market about “seed funding”, “angel funding” and “early stage funding”. As happens in these types of discussion, information gets mixed, so I thought it timely to talk a bit about ATA, other wise known affectionately in Atlanta as “The ATA” or Atlanta Tech Angels. We call ourselves “ATA” which is short for Atlanta Technology Angels.

What “is” ATA?

ATA is a member-based private organization comprised of 50 accredited individuals that choose to make private investments in technology companies based in Atlanta or other Georgia communities. Membership in ATA fluctuates between 50-55 members on an annual basis. We’d love to grow to 60-65 members, so give us a call or email me!

How does ATA support itself as a group?

Each of our individual members pay a membership fee each year to support ATA. We STRONGLY believe that entrepreneurs should NOT pay to present to a group of investors. We have never done that and never will. Our model is to have a pure investment environment.  The idea is to to be as active and straightforward as possible.

Does ATA have any outside business sponsors?

No. We believe strongly that entrepreneurs should only be presenting to investors. They should not have to work to understand who the investors are in the room when they are presenting. 100% of any guests at ATA meetings are prospective members, entrepreneurs or are otherwise associated with the Georgia technology community or the local, regional or national investment community.

Knox, are you a member of ATA?

Yes, I am. I joined ATA in 2001 and I have invested in 9 companies since 1999. I just invested in my 10th–Global Crypto Systems. I am a paid up member for 2008!

I was asked to take over as Managing Director in 2002. I promised the BOD that I would stay for one year.  6 years later, I am still here and I still love it.

Why does ATA only invest in technology companies located in Georgia?

- Because most of the individuals in ATA are either from Atlanta or Georgia and have had success in Atlanta or Georgia based companies.

- Because their are PLENTY of opportunities in Atlanta and other parts of the Georgia that are worthy of private investments by ATA members.

Do most of the companies that ATA invests in go on to receive venture capital funding?

Yes. Approximately 90% of the companies ATA invests in receive venture capital funding within 12-24 months of initial funding. I think this is good. It helps grow promising companies within Atlanta, it keeps promising companies IN Atlanta, it helps expose Atlanta to the outside investment community, and it can generate large returns for the angel investors–which can then be reinvested into the Georgia community. Yes, we actually thought this through when we started ATA in 1999.

However, the market is changing. We now have such a large number of serial entrepreneurs within ATA, that many are starting and funding their own new companies. This is a huge step for Atlanta. To have 2nd & 3rd generation entrepreneurs who have been successful to now fund outside companies as well as their own companies is a huge leap of faith for the Atlanta  tech startup market.

How much does ATA invest annually?

Depending on market conditions, between $2M-$6M annually. The quantity is not always that important to us. The quality of the opportunity and the quality and passion of the entrepreneur is important to us. Have “fire in the belly” and we’ll pick up on that and get just as excited as you.

How many investments does ATA make annually?

Depending on market conditions, between 2-8 annually. We have invested in as many as 12 companies in one year (2000–go figure that!) or as few as 2 (2003-technology nuclear winter).

We’re on #4 so far in 2008, having just funded Global Crypto Systems and working on closing another investment next week. I personally invested in Global Crypto.

Does ATA only invest in Georgia Tech or ATDC companies?

No. This is a common misperception in the Atlanta community. For example, Global Crypto is not an ATDC company nor is it Georgia Tech IP. However, it should be an ATDC company (hint, hint). We typically invest in companies before they are accepted to ATDC. In fact, we try to help companies get into ATDC. We know the ATDC folk very well and work with them in tandem identifying promising Georgia companies. We’ve been around long enough to see what companies are headed to ATDC, so we generally are exposed to them before they are accepted into ATDC. If we do miss a company before they are accepted into ATDC  (which does happen), we generally find that they are too expensive after the fact for us to invest in (topic for another discussion?). This is not a criticism, just a fact.

As for VentureLab, we lovelovelove to see the really early IP out of Georgia Tech. It’s not always immediately fundable, but we try to engage early and help the wonderful VentureLab staff as much as we can. Stephen Fleming has made HUGE strides with VL in his tenure there. My hat is off to him.

We see many opportunities from the overall Atlanta market, but the introduction of Capital Connections, TAG/GRA Business plan competitions and StartUp Riot, etc have been wonderful to see and have increased opportunities headed our way. I believe the many Atlanta entrepreneurs in the local startup market are finally getting to know each other.

Does ATA only review 2 companies each month?

We don’t look “at just” two companies each month. We probably look at 15-20 companies each month and consciously choose 2 companies to formally present to the ATA investors at large each month. One of the worst things you can do to a company trying to raise capital (or look for employees or trying to understand how to grow, etc) is to allow them to present to a large group of investors without the company being prepared. First impressions count in this arena. So, we try and make sure the company is “ready” for the presentation. If they are not, we work with them to get ready. That may take 1 month or it may take 6 months. Either way, we are going to make sure you are ready.

Will you answer other questions about angel investing or the Atlanta market if I send them in?

Sure. I’d love to. Send them in.

knox.massey at angelatlanta.com

Among the 15 largest metropolitan areas in the United States, the highest entrepreneurial activity rates were in Phoenix, Riverside-San Bernardino, Atlanta, Los Angeles and Miami.

Yee of little faith, begone!

So, up pops a new comment regarding the Atlanta Technology Angels on “thefunded.com” today. The anonymous posting made a good point–we are angels–not VC’s. Yes, we do have processes in place–but that is to help manage the number of investors we have         (50+) and to screen opportunities in a competent manner. The screenings we implement also give us a chance to meet, and spend time with, local entrepreneurs–something we think is very important for both investors and entrepreneurs.

As someone at the Adams Capital “angel lunch” pointed out yesterday–it’s not only the money that is important. It’s the people and the community. ATA has learned that over the last few years and take it to heart.

 And, hey, “Serialsoft”, have the courage to go public. What you say and who you are is important to Atlanta.

On the (Money) Hunt

I was on vacation last week for Spring Break. The schools my children attend both were out last week, so I used the excuse to take to week off. Had a great time with my kids all week. Our youngest son was baptized Easter Sunday in a sunrise morning service at 6:00. What a wonderful service it was. Occasions like that put life in such a simple perspective.

 House Bill 1196 is an amendment to the Georgia Tax Code.

In specific, it is an amendment to Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated.

 This amendment would give investors who invest in the GRA Seed Capital fund a 25% state income tax credit. In other words, you can only get the 25% state income tax credit IF you invest in the GRA Seed Capital Fund.

No one else in the state of Georgia would qualify for this 25% credit UNLESS you are a limited partner (investor) in the GRA Seed Capital Fund.

I have previously posted about the 2008 Georgia Research Alliance Seed Fund. If you read the previous post, you’ll understand that I strongly support the new GRA Seed Fund.

Why does this particular bill bother me?

- 21 other states have some form of tax credit for early stage investors in their respective state. None have restictions similar to House Bill 1196. In fact, most of the states that have investment tax credits encourage individual investors to take advantage of the local tax credits. House Bill 1196 will restrict the Georgia tax credit to a few select investors.

 - House Bill 435, the “Angel Investor Tax Credit Program”, was introduced in 2007 in the House. Here’s a story that ran on February 23, 2007 in the Atlanta Business Chronicle on House Bill 435. House Bill 435 gives ALL qualified investors in the State of Georgia a 100% tax credit for investing in early stage companies. House Bill 435 is intended to encourage entrepreneurship and economic development in the State of Georgia. House Bill 1196 is exclusive of other early stage investors in Georgia that have, for decades, been investing in companies formed by university intellectual property. Why should a subset of  investors now get special treatment?

- This fund is funded by state money–$10,000,000 of taxpayer money to start the fund which then has to be matched by up to $30,000,000 of private money. As a taxpayer of the State of Georgia, I’m now a limited partner of this fund. Now, I have to do my due diligence.

The Atlanta Technology Angels (known as ATA) is a formal angel investment group founded in 1998. It is comprised of 50+ private individuals who are active angel investors. ATA’s investments are focused on early stage, Georgia based, technology companies that are focused on large markets. 90% of the companies funded by ATA receive local or outside venture capital funding within 12-18 months of angel funding. The group has funded 40+ technology companies since 1999 and currently has 24 active portfolio companies. ATA, as a group, has invested $25,000,000+ into these 40+ companies and these same companies have gone on to raise over $300,000,000 in venture capital funding from 21 venture capital funds in 18 states. The vast majority of the members of ATA are active investors and often mentor entrepreneurs within ATA portfolio companies. Recent positive exits include Invirtus and Spi Dynamics. ATA formally reviews two companies 10 months out of the year. ATA has completed one funding in 2008, is closing another in March and is actively engaged in additional financings.

Adams Capital  Angel Lunches

David Adams is underwriting a new series of “Angel Lunches”. The angel lunches are designed to bring together new and old angels to talk about investing experiences. The intent is to try and encourage additional angel investing in Georgia. Michael Blake has been tasked in arranging the lunches and Adams Capital has brought on Charlie Paparelli to help  ”herd” diverse angels in the greater Atlanta area. The lunches are open to all active and/or new angel investors and are currently held at the nice Georgian Club. I do not believe that Adams Capital has an investment fund, but rather can source entrepreneurs who use Adams Capital services to these various individual angel investors. Contact Charlie or David for an invitation.

The Seraph Group

Small VC fund that has morphed from angel status to fund status. LP’s are individual investors. Tuff Yen heads it up although Stephen Fleming has a strong influence within the fund. Has done 2 Atlanta investments. Seems to be focusing on West coast based opportunities.

Imlay Investments

I’m a huge fan. No website. I love that. (Don’t ever go to a meeting with Sig or Melanie and tell them you read about Imlay on their website. You’ll have a very uncomfortable next 30 minutes.) Sig and Melanie are universally known and admired in the early stage Atlanta technology scene. Have had some huge hits (TradeX, ISS) and more are coming.

 Charlie Paparelli

Charlie is a “lone wolf” angel investor. That is, he prefers to work alone when investing in young, technology-focused companies. He prefers service based companies with recurring revenue and experienced managers. However, Charlie is now actively engaged with Startup Lounge and Adams Capital. Charlie is also very involved in High Tech Ministries.

Steve Nussrallah/Value Plus Ventures

Steve, formerly of Noro-Moseley, has started a new investment and consulting outfit here in Atlanta. Steve will use his past management skills and VC fund experience to help entrepreneurs hit milestones within their respective young companies as they seek to gain venture capital funding. Steve and his partners will put a small amount of capital into each company they choose to work with, will give “hands on” operational experience to the entrepreneur and will then help the entrepreneur seek venture capital funding.

 ATDC Seed Fund

State funded. Often co-invests with angel investors. $3 to $1 match provision ($3 private capital to each $1 state funds) Run by Charles Ross within ATDC. This one is getting active and is one to keep an eye on. Has plenty of capital. Remember, tho, that the match is a must for any investment. So to get ATDC in, you must have private capital.

Communications Group

Run by Martin Tilson at Burr Forman. Founded, I believe, in 1996. Geared more to the VC crowd. The format is a nice dinner once a month with at least two presentations by technology companies looking for funding. Although I believe most of the presenting companies are Georgia based, the group is open to SE based technology companies. Membership is inviation only. I’ve never been(although I have been invited), but I hear Martin does a great job with this group.

 NBA&I

NBA&I is a very broad based investent group. Founded in 1994 by Jerry Martin and now run by Karen Rands.

What/who did I miss?

 Here’s the link.

ATA members were some of the earliest investors in Qcept back in the days of the technology “nuclear winter” (2002-2003). In the article, we’re now listed as “existing investors”. (VC’s get the love later in the game.) An early ATA member, Lenny Borg, was one of the first investors in the company and had courted Bret Bergman to join as CEO.

This is what angel investing is all about. Watching pure technology generated out of a university turn into a….company.  (Of course, a lot of employee and investor sweat and capital was contributed as well.)

I didn’t write it, just repeating it….