Sunday, September 11, 2005

Angel (Investors) in America:

Corante says:
Posted by Dana Blankenhorn

Richard Wingard has figured out a way to fund cutting-edge technology with angel investors, and hold them in their investments for nearly 7 years.

Wingard runs Euclid Discoveries, which is working on an object-based video compression technology he says will deliver 10 times the performance of MPEG-4, enough to “turn your iPod into a DVD player.”

And he’s done it all with angel investors, who are best-known for backing only early-stage customers. Wingard has rejected the entreaties of venture capital firms, saying their time frames for pay-outs are too short. Yet he has succeeded in getting angels who will wait as much as 7 years for a private auction of his technology, and a distribution.

Want to know how he did it?

1. Communication -- Both Wingard and his partner spend an incredible amount of time communicatiing with, and preparing communication for, the investors.
2. Validation -- Wingard hired Charles River Associates (now known as CRA International) to validate his claims, and value his claims, before asking for new investments and higher valuations.
3. Patents -- Wingard aggressively sought patents for his technology and now claims valid patents on video compression techniques he's using dated as early as 2004.
4. Exit Strategy -- Wingard has been clear with his investors from the beginning on exactly how and when they will get their money out, through a private auction of the technology, when it is ready for commercial deployment.

'There are more angels out there than in the past 5 years,' he concludes. 'We’ve now got a very good model, about getting investors, about maintaining them through the long haul of R&D.'
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