Angel investors are Accredited Investors who invest in high-risk, early-stage ventures by reserving a small portion of their total investment portfolios to provide emerging companies with seed and startup capital through direct, private investments. Most angels are active investors who contribute their time and experience to the companies in which they invest by making introductions to valuable contacts and providing strategic guidance.
This is a term defined by the Securities and Exchange Commission. Individuals are accredited investors if they have a net worth, or joint net worth with a spouse, in excess of $1,000,000, excluding primary residence, and/or individual income in excess of $200,000, or joint income with a spouse in excess of $300,000, in each of the two most recent years and a reasonable expectation of reaching the same income level in the current year.
Yes, Element 8 is an Established Angel Group and is a member in good standing of the Angel Capital Association. This assures our members and entrepreneurs that we follow a set of criteria in vetting and accepting our members which meets SEC guidelines, while protecting our investors’ privacy and without requiring full disclosure of their financial assets. More details and assurance that Element 8 is on the list of currently valid Established Angel groups can be found at the Angel Capital Association website.
Currently we have close to 70 members who come from a wide range of professions. Many are present and former high-tech and cleantech entrepreneurs and executives. Other members have deep experience in finance, environmental engineering, real estate development and the utility space.
Element 8 meets eight or nine times each year to hear from pre-screened companies about their investment opportunities, twice each year for social gatherings, and several times per year for special member-and-sponsor-only educational events.
Member meetings alternate between Eastside and Seattle locations.
Our regular monthly meetings are typically held mid-week, and lunch is provided. Education and social events may take place during business hours or in the evening.
Our screening committee currently approves approximately 25 new companies each year to present.
The range varies widely, both by individual investment and by total portfolio size. Individually, Element 8 members typically invest $25,000 to $100,000 per deal. Some occasionally contribute more.
A significant benefit of belonging to Element 8, however, is that the collective total of our investments to a given deal often makes it possible, once a minimum threshold has been reached, for members to then contribute smaller dollar amounts than the company might accept from an independent investor.
Due diligence is the term used by investors to describe the process of deciding whether or not to invest in a particular opportunity. Collaborating on this process with other interested members is a significant benefit of joining Element 8. Not only does this reduce the cost and time burdens for each investor, the collective savvy available increases effectiveness.
After a company presentation, interested members form an informal due diligence (DD) group and share the work involved. A more experienced angel volunteers as ‘deal lead’ to guide the members through a multi-week ‘discovery process’ to better understand the market and the company’s potential, and to act as liaison with the company.
Members use an efficient combination of WebEx meetings, scheduled teleconferences, a private ‘deal room’ on Gust, and in-person meetings to share insight, concerns, and documents. Element 8 provides helpful ‘due diligence checklists’ and other guidance.
The process usually culminates in the members negotiating a term sheet with the company, or assessing an existing one. At this point, individual investors generally decide if the offer is personally compelling, and whether to opt in or out.
Involvement in DD in no way obliges you to make an investment. Many of our members participate solely for the excellent educational opportunity it provides.
A term sheet is a summary of all important aspects of a deal negotiated by potential investors and the company during the due diligence process. It is not legally binding. The terms become binding when translated by the company’s and/or investors’ attorneys into multiple documents at closing, they are signed by all parties, and money is exchanged by the angels for equity (or sometimes convertible debt and rarely straight debt) in the company.
In some cases, Element 8 negotiates the term sheet. In others, another angel or angel group has already invested in the company. In those cases, a term sheet is in place before DD begins and the process focuses on whether Element 8 wants to conduct further research, or whether it represents a compelling investment.
Element 8 simply provides a forum for the matching of entrepreneurs of early stage companies with investors who are committed to funding high-risk opportunities. Please read the Legal Disclaimer, which describes the legal relationship among Element 8, members and entrepreneurs or companies, and also our Confidentiality Policy.
Yes. Members are encouraged to participate as much as their interest allows. Opportunities include: