Mission
Enterprise Angels seeks to encourage the development of start-up companies and to support new businesses in the Louisville area by providing entrepreneurs with seed capital and management guidance from industry and entrepreneurial veterans.
Objectives
- To provide members with an attractive financial return.
- To provide pre-venture capital equity to start-up and/or expanding companies.
- To promote and enhance entrepreneurship in the Louisville business community, by working with entrepreneurs, service providers, government, and other investment organizations.
- To offer opportunities for members to mentor managers, providing valuable expertise to new businesses.
- To create economic growth and jobs in the Louisville area.
Administration and Organization
- Enterprise Angels will maintain a working relationship with Greater Louisville, Inc. (GLI) and its subsidiary, The Enterprise Corp, which will provide an Executive Manager for the organization. The Executive Manager will be responsible for arranging meetings, screening companies for presentation, performing treasury and secretarial duties, and managing member information.
- In addition to the Executive Manager, GLI will provide additional back-office and administrative support, including public relations, marketing initiatives, and website development and maintenance.
- In order to protect GLI and the members of the group, the Enterprise Angels will organize as a not-for-profit LLC; however, all investments made by the Enterprise Angels will be made as individual member investments directly or through a pooled investment vehicle.
- During the group’s launch, an operating committee, consisting of the Executive Manager, GLI’s VP of Enterprise Development, and at least three members of the Enterprise Angels, will be formed to establish other guidelines and processes, including the group’s membership and due diligence guidelines. After completing this process, the committee will meet at the group’s discretion to modify these guidelines as necessary.
Membership Requirements
- All members must be accredited investors as defined in Regulation D under the Securities Act of 1933, or SEC Rule 501, and must be able to sustain the financial risk inherent in their investments (see requirements below).
- Members of the group may be either individuals or pre-existing investment entities. Entities that apply for membership must show evidence of previous investment history and consist of no more than four people, all of whom may participate as regular members in the Enterprise Angels.
- Each member will pay an annual fee to cover the group’s administrative and operating costs. Individual members will pay an annual fee of $1,000; entities consisting of two members will pay an annual fee of $1,500, entities consisting of three members will pay an annual fee of $1,800, entities consisting of four members will pay an annual fee of $2,000. These amounts are subject to change based on the group’s needs.
- Each member will be expected to invest $50,000 in companies presented to the group over the first two-year period of membership.
- All members are expected to perform the following duties:
- Attend at least 50 percent of the regularly scheduled meetings
- Periodically participate in due diligence and follow-up
- Provide timely feedback on company business plans presented for review
- Bring to the group potential deals of which they have become aware
- Promote the goals and objectives of the Enterprise Angels to the Louisville business community
- Interested parties may apply for membership in the group. All new members must meet the membership requirements; procedures for electing new members will be determined by the group or the operating committee.
Potential Investments
The following are general guidelines describing the types of investment opportunities:
- The group or the operating committee will determine what industry focus (if any) the group will maintain.
- Investments in any one company will normally be in the range of $25,000 to $250,000.
- Each investment should offer the potential for an attractive return within a seven year period.
- Companies must display the potential for rapid growth and the creation of jobs in the Louisville area.
- Companies seeking funding from the Enterprise Angels should normally be in the early stage of their development. This does not preclude the Enterprise Angels from investing occasionally in later stage development opportunities.
- Investment opportunities may offer one or more group member an opportunity to actively participate as a consultant, board member, or business advisor.
Investment Process
All potential investment opportunities must be submitted through an online application to the Executive Manager for the initial screening process. For opportunities that pass this initial screening, a standard “first look” document will be distributed via e-mail to the group members. Submissions of interest to the angels will be invited to present at the next group meeting. If the Enterprise Angels decide to pursue an opportunity, the group will elect a lead investor to follow-up with the company and perform due diligence. Within a reasonable period of time (usually before or during the next group meeting), the lead angel will report the results of the due diligence process to the rest of the group, after which investment decisions will be made.
Meeting Schedule and Format
During the formation of the Enterprise Angels, group members will select a day to be blocked each month for the group meeting. Each month, the Executive Manager and angels will decide, based on the number and quality of applications received, whether or not to hold the meeting. The Executive Manager will announce the status of the meeting to the group at least two weeks in advance of the scheduled meeting date. If the meeting is to occur, an agenda, with information on the presenting companies, will be sent with the announcement. Each meeting will last approximately ninety minutes; each meeting will consist of 1-3 presentations, group discussion, due diligence reports, and other announcements.
Accredited Investor
An individual is an Accredited Investor if the individual has:
- an individual net worth (including home, furnishings and automobiles), or joint net worth with the individual’s spouse, in excess of $1,000,000.
- had an individual income of more than $200,000 in each of the two most recent calendar years, and reasonably expects to have an individual income in excess of $200,000 in the current calendar year.
- had a joint income with the individual’s spouse of more than $300,000 in each of the two most recent calendar years, and reasonably expects to have a joint income with the individual’s spouse in excess of $300,000 in the current calendar year.