Luis Villalobos, founder of TechCoast Angels (TCA) and a founding member of the Angel Capital Association (ACA), is the recipient of the 2007 Hans Severiens Award. The annual award, jointly sponsored and presented by the Angel Capital Education Foundation and ACA, recognizes one individual whose accomplishments advanced angel investing.
Announcing the award at the 2007 ACA Summit in May, Susan Preston, managing director of the CalCEF Clean Energy Fund, said, “Luis is a pioneer in the angel group field, with impact on a national and world stage. He has willingly shared his knowledge about the angel investing process, particularly in valuation, with other angels and angel group leaders through education, writing, and informal mentoring. He has truly advanced the legacy of Hans Severiens.”
The award is named after Hans Severiens, one of the fathers of angel investment organizations. Dr. Severiens founded Band of Angels in 1994 as one of the first professional angel investment groups in the United States. He was also a founder of the Angel Capital Association, a companion organization to ACEF.
Having made 63 angel investments personally with an average return of 5X and having developed and led over 100 workshops on valuations, due diligence, term sheets, deal structures, diversification, venture capital, angel investing, early-stage funding, business plans, patents, and intellectual property, Villalobos is one of North America’s most active and successful private equity investors.
He had been making angel investments for 15 years when a local business council recruited him 10 years ago to lead a pro bono task force to help capital formation in the Orange County region. Villalobos contacted Hans Severiens, then leader of the Band of Angels in Menlo Park, CA.
“I must have talked to Hans a dozen times in a week,” Villalobos says. “He was very, very gracious. The Band had been operating for about three and a half years, meeting once a month for dinner where one or two companies made presentations. The staggering thing was that the Band had funded half the companies that had presented.”
Villalobos disbanded the task force, and started TechCoast Angels. “If you fund at least half the ventures that make presentations,” he says, “you are going to attract the best ventures and the best angels in the region, and make it easy to meet the funding goal. This model is one of these so-called virtuous cycles.”
Villalobos added additional formal processes to the Band of Angels model, but whereas the Band was based in Silicon Valley—the heartland of high tech entrepreneurial activity and venture capital—the Orange County business environment where TechCoast Angels began was very different.
“Local people told me I would be wasting my time and would be lucky to have a handful of angels in five years,” Villalobos says, “because in contrast to Silicon Valley, I was told that Orange County had no VC money, no angels, and was all about real estate, but if I had known then what I know now, I would have started the group a lot earlier.”
Today TechCoast Angels is the largest and most active angel groups in the country and consists of four geographic networks in Los Angeles, Orange County, San Diego, and Westlake/Santa Barbara. Since its launch a decade ago, the group’s 300 members have invested $84 million of personal capital in 132 companies which have gone on to attract an additional $810 million in capital.
“It is an honor to receive the Hans Severiens Award, and I would like to thank ACEF and ACA for this recognition,” Villalobos says. “I took the idea that Hans used for the Band and added additional formal processes, but ultimately it’s all about the people involved. TechCoast Angels wouldn’t be where we are without the huge numbers of members who put in countless hours to build up various networks, vet our deals, engage in the investment process, invest their capital, and support our ventures post-funding.”
Villalobos, who describes himself as a model builder, is presently working on a collaborative venture capital fund. “Venture capitalists are going away from early stage investing,” he explains, “and that leaves a big vacuum because angel groups, even as big as we’ve gotten, almost always want external capital to come into every deal.” The new company, Angel Venture Partners, is raising $100 million and will operate as a hybrid venture fund.
“Angel Venture Partners will combine the strengths of the classic VC model with the strengths of angel groups and serve as a model to bring outside capital into angel groups in a way that is compatible with how angel groups work,” Villalobos says. “Angel groups, like TCA, may devote 500 member-hours before funding a deal, hence they expect substantial value to accompany the external capital; otherwise members balk at letting outsiders just ‘throw in checks at the end’ since the angels receive no compensation for their time.”
