In Boston, or any city for that matter, angel investor groups are among the most common sources of startup funding. These networks, which enable angels to aggregate capital and invest as a group in the deals they deem promising — individually or collectively — make it a lot easier for entrepreneurs to access capital than calling individual investors. The main problem: With so many decision-makers in the game, it can take a while to see any of that funding. Which means it might take even longer for a business to go from an idea on paper to a proof-of-concept.
But NextGen Angels is working on streamlining the process. The community, which launched three years ago in Washington, D.C., is comprised of younger-generation influential angels, who leverage their collective expertise and connections on behalf of the portfolio and invest in exceptional early-stage companies. Since being founded, NextGen has gained traction and recently closed a $1 million round of funding, which will fuel its development in other locations across the country. And Boston will be the first new city in which NextGen launches from scratch.
Planting the seeds for national expansion
Already, NextGen has been establishing roots in New York City, with former Techstars director and HBS grad Kelsey Morgan coming on as managing director there. Now, in Boston, serial entrepreneur Chris Keller is taking on that same role. In addition to being an active angel investor and advisor to startups in the Boston community, Keller has helped to run HubSpot Labs and founded several tech companies himself, including Followup.cc — which was acquired by Argon Technologies.
So why Boston? A number of conditions came together. NextGen founder and CEO Dan Mindus—along with president Brett Gibson—both attended Harvard Business School, so they were well aware that this city boasted a fertile breeding ground for tech startups. It also made sense geographically, since Boston is close to both Washington, D.C., and New York City. Once the team met Keller through Next Gen’s COO Brian Vahaly, it was clear that The Hub was the perfect place to set up shop.
What sets NextGen apart
NextGen Angels promises to provide a yes or no answer within 48 hours. If it’s a yes, the group actively works to ensure the due diligence has been done and the money is in the bank within 30 days.
The overarching quality that defines NextGen is that it aims to be ultra founder-friendly. In other words, they make sure processes don’t get dragged out, and furthermore, that all aspects of raising funding are as easy as possible for the entrepreneurs. In fact, Keller told me in a phone interview that NextGen Angels promises to provide a yes or no answer within 48 hours. If it’s a yes, the group actively works to ensure the due diligence has been done and the money is in the bank within 30 days. Another distinguishing factor? Typically, a startup that raises money from a handful of investors will have to collect paperwork and checks from all of them. But NextGen handles all of that for the entrepreneur. By making an investment through a special purpose vehicle — meaning they form an LLC and that LLC invests in your company — they simplify the steps.
And despite being rooted on the East Coast, NextGen prides itself on taking a West Coast attitude. Keller explained that on the East Coast, the stereotype is that investors are a little more conservative with money, and more likely to do onerous due diligence. On the West Coast, angels tend to be more lax and get checks written quickly. NextGen is trying to strike a middle ground between the two extreme mindsets.
“We want you to be able to get back to running the business,” Keller said.
Building out the Boston network
Over the last couple years, NextGen Angels has backed 12 companies, and two more deals are currently in the works. And while they vary somewhat in industry, there are a few common factors among the companies they’ve invested in: They’re tech-enabled, have a big market, and show potential for higher growth. As Keller works to build up the Boston portfolio, he noted that a few local trends may come to light — like say, biotech and robotics.
As for Keller’s role, his top priority right now is to develop and nurture an energetic and engaged community of angels that are eager to help startups and put some dollars to work. The D.C. network has already harnessed 80 investors, and while there’s no hard age cut-off, NextGen is specifically targeting members who are 40 and under.
“We’d like them to have some experience or role in the startup world,” Keller told me. “Hopefully they’ve been an entrepreneur of some kind — whether they ran an Internet startup or a retail business — or they’ve been an investor, a lawyer or marketer for startups. So their skill set is still relevant in helping seed stage companies. Much in the same way that universities look at their student population, it’s about finding the unique attributes in all those people.”
What NextGen is trying to foster is a community of young, inspired angels who aren’t just pooling their money, but continually exploring new ideas on how to help the local startup realm thrive.
There’s a reason why NextGen is skewing younger, too: It’s a lot easier for entrepreneurs to relate to an angel in the same age range as opposed to someone who last sold their company 20 years ago.
“How would you feel if you were going to pitch a group of people and it was all your peers, versus people say, 30 years older than you?” Keller said. “The idea is partially that we want entrepreneurs to feel like they’re pitching friends, colleagues, and the kinds of people they’re hanging out with and working with and learning from.”
In short: NextGen is trying to foster a community of young, inspired angels who aren’t just pooling their money, but continually exploring new ideas on how to help the local startup realm thrive. Keller’s vision is for this network to be so strong that they’re even going on trips with one another. And long-term, he sees immense networking opportunities for members. In 2015 alone, NextGen plans to launch in Chicago and Austin, among potentially other cities, and the goal is to eventually be in 100 locations. As NextGen grows into a national and possibly international network, it would become a lot easier for a Boston entrepreneur to get in touch with a person at another NextGen portfolio company, regardless of their geographical location.
Images courtesy of NextGen Angels/Chris Keller.
