What is FirstAngelsJA?
FirstAngelsJA is a network of angel investors, or an angel investor group, focused on financing early stage companies in Jamaica and the wider Caribbean.
We host member meetings and luncheons at least every two months (this may be more often depending on deal flow) with entrepreneurs working on new ideas or growing their existing businesses. We’ll block off time following their presentations to discuss the opportunities.
Being a single entry point for entrepreneurs to pitch their ideas means that the network will see lots of ideas that they can route to the members that are likely to be interested. This fast-tracks the process of a founder getting their idea in front of the right investor (you).
Standard documents, diligence process
Group due-diligence can help filter poor investments. Group evaluation gives a broader view of the target market and its challenges. Group gut-checks give more data points when evaluating founders.
Being part of an angel network can help reduce the amount of investor diligence founders need to perform. Founders are somewhat more likely to rely on the network’s membership selection process in determining the quality of an investor.
If you’re new to angel investing, joining an angel network can help you learn from more experienced investors. Rather than reading about the process, you can participate and invest alongside members rather than on your own.
Who can become a member?
Prospective members must:
- be an accredited investor as defined under the Financial Services Commission (FSC) Guidelines for Exempt Distributions s. 2.2(g) & (h), being: [“Any individual whose net worth exceeds JA$50,000,000.00, or a corporation over 90% of the voting shares of which are owned by such an individual or a trust of which such an individual is the sole primary beneficiary ”; OR “Any individual who had an income before taxes in excess of JA$10,000,000.00 in each of the two most recent calendar years by such an individual or a trust of which such an individual is the sole primary beneficiary”]
- be sponsored by an existing member.
- agree to abide by the terms and conditions of the FAJ Membership Agreement.
How does corporate membership work?
Membership is strictly limited to individuals, so corporations cannot become members per se. That said, it’s quite common that a member would want to put corporate capital into an investment in order to utilize corporate resources for the benefit of the portfolio company. In this situation, we encourage corporations to make an investment through an individual member, where shares from the investment are irrevocably held by the individual until a future liquidity event at which point the returns are passed back to the corporation.
The key point is that entrepreneurs looking for angel investment want to form a relationship with an individual, not an institution. As a result, controlling interests should be vested solely and irrevocably in that individual.
What is an angel investor?
An angel investor is an individual who makes direct investments of personal funds into a venture, typically early-stage businesses. Because the capital is being invested at a risky time in a business venture, the angel must be capable of taking a loss of the entire investment, and, as such, most angel investors are high net worth individuals. These individuals are nearly always “accredited investors” as defined by the SEC in the USA.
What is an angel network?
An angel network is a formal or informal assemblage of active angel investors who cooperate in some part of the investment process.
Key characteristics of an angel group are:
- control by member angels (who manage the entity or have control over the entity’s managers), and
- collaboration by member angels in the investment process.
Is membership in FAJ restricted?
Yes. Membership is by invitation only, and must be approved by our Membership Committee.
How do I learn more about angel investing?
While we will not operate formal education programmes for members, every effort will be made to maintain a high standard of educational resources on our website, either directly or via edited links to resources on other reputable sites.As a participant in the Xcala Project, funded by the Inter-American Development Bank and a beneficiary of support from the Access to Financing programme of the World Bank’s infoDev project, a number of educational opportunities will be made available, including attendance at conferences overseas Periodically, we will have speakers on relevant topics as part of regular meetings. Also, members will always be able to learn from other more experienced members.
How does the investment process work?
- A founder makes contact with FAJ (in-person, via referral, or directly via FAJ’s website)
- FAJ’s Manager pre-screens the project (does the idea make sense? does it fit the criteria for angel funding?)
- FAJ’s Manager shares the pre-screened opportunity (called a “deal”) with the group
- Certain members express interest in funding the deal (this is where FAJ’s direct involvement ends and all subsequent steps in the investment process are driven by those members expressing an interest to fund the transaction).
- Interested members volunteer to serve on the due diligence team, along with FAJ’s Manager. The team will have access to FAJ’s resources (standardised investment documentation, diligence checklists, other members’ knowledge and experience) use such resources to structure and close a private investment in the company. While FAJ remains available as a resource for members, it is no longer directly involved in the investment, which is carried forward by a group of individuals (the interested members) and the company they’re investing in.
Is there a minimum number of investments I must make in order to remain a member?
Definitely not. If you aren’t interested in any of the opportunities, there is no requirement to make an investment.
Are there any restrictions on the size of an investment?
Definitely not. Investment amounts can be as little or as much as you decide.
How will investment decisions be made?
You as the investor get to decide exactly how much you want to invest in any given opportunity. When possible, for the purposes of simplicity, you should try to settle on a single valuation number alongside the other angels interested in the same opportunity.
How will presenting companies be selected?
Companies seeking funding from angel investors will first submit a funding application via the website where guidelines will be provided for submission along with the selection criteria that will subsequently be used when assessing submissions. FAJ will operate a Screening Committee that will assess submissions and make recommendations as to those applicants who will be invited to present at a regularly scheduled investor meeting.
How is due diligence conducted?
FAJ’s Manager supports the due diligence process, led by members who have indicated an interest in investing in the venture. External resources may be contracted by investors, as needed.
How is FAJ operated?
FAJ is manager-led. Management functions include: Member recruitment and communications, developing, in association with legal experts, templates for legal documentation, event management, website maintenance, facilitating the matching of applicants with investors, pre-screening of funding applications, supporting the due diligence process, facilitating education and training programmes for members and applicants for funding, developing and managing special projects, marketing communication and managing the organisation’s governance.
How is FAJ funded?
All members are required to pay an initial joining fee and annual membership subscriptions. These fees are used to defray the expenses of managing the Network, including, but not limited to, website maintenance, meetings and events. FAJ also solicits grants to support its development work.
Is there any fine print?
- Membership is at the discretion of the Membership Committee and is subject to annual renewal, non-renewal, revocation or termination.
- To be considered for membership, applicants must complete and submit the FAJ Membership Agreement and Membership Survey.
- FAJ’s Membership Committee will review all applications for membership and endeavor to provide applicants with a response within thirty days.
- Membership is at-will and may be terminated or revoked at the sole discretion of FAJ’s Membership Committee with or without cause.
Meet Michael Claire, CEO of LoanCirrus Limited, a cloud-based lending management software. LoanCirrus’ connection with FAJ is a little different from the other companies that have received investment, in that Michael is actually an associate member of the angel network. #FAJ