Early Stage Startups Get Wings from TiE Angels- Highlights of Nov 15th meeting

Introduction to TiE Angels

With venture capital and private equity firms concentrating their investments on existing portfolio companies and unwilling to invest small amounts of seed capital, where does an emerging start-up company look for funding? Where can they express their value proposition to a serious group of individual investors? The Indus Entrepreneurs (TiE) has a solution. Created in July 2010 as a platform for angel investors to work together to evaluate entrepreneurial companies, the TiE Angels aim to provide a structure, process and discipline for angel investing, as well as to benefit from the collective wisdom of other angel investors. TiE Angels is not a venture fund, an investment bank, a broker/dealer, investment clearing-house, or an Investment advisor, but rather a forum in which investors may be educated on aspects of investment and business, as well as be introduced to companies for possible investment.

“TiE Angels is uniquely positioned to bring angel investors and entrepreneurs together,” said Venk Shukla, TiE board member and convener of the TiE Angels Steering Committee. “TiE’s network of business leaders and investors are committed to identifying, funding, and enabling success for the next generation of stellar entrepreneurs,” he said. Vish Mishra, TiE Silicon Valley President and Venture Director of Clearstone Venture Partners stated. “Since its inception, TiE has served exceptionally well as a mentor, educator and advisor to entrepreneurs who have created great companies with early-stage funding from our venture capital colleagues. TiE Angels will now provide seed capital to promising entrepreneurs to put them on the first-rung of the success ladder, a crucial need in the current economic environment.”

Key industrial sectors of interest to TiE Angels include; Mobility, Internet, Software, Infrastructure, Bio- Sciences, and Clean Tech. Start-up companies should be at an early stage of funding, typically up to $500K. There is a preference for local companies (SF Bay area) working in the aforementioned industrial areas. The start-up should not be VC backed or have submitted a funding plan in the prior 12 months. After evaluation and due diligence by the TiE Angels Steering Committee, the top three or four start-ups are invited to present at monthly meetings. Initially, the TiE Angel forum was only open to TiE SV Charter Members who are also accredited investors (liquid net worth of at least $1M). But now, TiE Charter Members are inviting accredited investors who are deemed to be Charter Member material. Accredited investors interested in joining TiE Angels should contact Mr. Shukla (vnshukla at yahoo dot com).

According to Kiran Malhotra, TiE-Silicon Valley Executive Director, there is a multi-step screening process before companies are selected to present at the TiE Angels monthly meetings:

  1. Start-up companies apply through an online platform, Angelsoft, on a rolling basis. 
  2. A base of experienced angel investors, TiE Charter Members and other experts who have extensive domain/industry knowledge screen these companies. 
  3. Companies that pass this online screen are invited to give a face-to-face presentation to the screening committee. During the face-to-face meeting, the screening committee asks clarifying questions and will also discuss each company amongst themselves, privately, after each presentation is complete. 
  4. At the end of all of the face-to-face presentations, each screening committee member is asked to vote on their top three selections. Those top three (or four if there is a tie) companies will present at the next TiE Angels monthly meeting. Only qualifying companies are selected – even if only two companies present at the next TiE Angels monthly meetng. Quality is of higher priority to TiE Angels than the number of companies selected to present.

In a recent letter to TiE Charter members, Mr. Mishra stated, "With its objective of expanding access to capital for early stage companies, TiE Angels is a natural extension of TiE’s primary goal of fostering entrepreneurship." Providing a short progress report Vish said, "In three short months, over 50 companies have been evaluated, 18 companies have been short-listed for in-person presentation to the TiE Angels steering committee, and 9 finalists were invited to present to over 80 angel investors in three monthly meetings. In addition, two term sheets have been issued and closed. This is quite remarkable!"

The TiE Angels website contains relevant information on preferred sectors and geographies, and an overview of the screening and selection process. Organizations like TiE Angels are necessary to foster entrepreneurship and innovation in the current economy.

About TiE

TiE is a global, not-for-profit, non-political, and non-religious organization dedicated to fostering entrepreneurs across its global network sponsored by top venture capital, legal and accounting firms and Fortune 500 corporations. TiE is spread across 56 chapters in 13 countries comprising 2,000 experienced entrepreneurs and business executives as charter members and 13,000 aspiring entrepreneurs and professionals as members. TiE Angels is within the domain of the Silicon Valley chapter. For more information about TiE-Silicon Valley, please visit: http://sv.tie.org/


Highlights of November 15th Meeting

After opening remarks by TiE's Venk Shukla, four entrepreneurial companies presented to the audience of about 60 angel investors:
 

  • Federspiel Controls – enterprise energy management for data centers and large commercial buildings
  • Andaaz Inc – South Asian media company using a combination of on-line and on-air platforms
  • Vu Stick – a medical device development company focusing on access illumination markets
  • Trulioo – a consumer information firm specializing in global identity and age verification

Federspiel Controls was the company of most interest to Viodi View readers, because of its telco orientation. This small but rapidly growing firm has sold smart energy control systems to Verizon and NTT for use in their respective data centers. The company claims to be "the leader in closed-loop, enterprise energy management systems for data centers and large, commercial buildings."

Since its 2004 inception, Federspiel Controls says it has pioneered the application of advanced, artificial intelligence technology to the real-time demands of energy usage, delivering significant reductions in operating costs and increased reliability. The firm is located in the technology corridor of San Francisco's East Bay and is committed to green energy solutions that make for a more sustainable planet. They have targeted data centers and large commercial buildings in order to focus its efforts on delivering products and services tuned to the particular needs of those environments.

Energy consumption at data centers is growing at an annual rate of 15% in the U.S. – a doubling of energy use every five years. In fact, power is the single largest operating expense for most data centers, almost half of which will run out of cooling capacity or power within the next two years. While there are a variety of "best practices" approaches to ensure proper cooling in data centers, research has shown that dynamic cooling control with a closed-loop energy management system delivers the greatest power savings. As much as a 50% decrease in cooling energy may be realized in data centers. More importantly, such a system can also provide the resilience and headroom that a data center requires to maximize non-stop, uninterrupted operation, ensuring maximum uptime and operating efficiency. The value proposition is that energy cooling becomes a managed resource with measurable paybacks in reliability, resiliency and reduced power costs.

The Federspiel Controls energy management solution is designed to deliver on the following goals:

  • Turn cooling into a managed resource – Data from real-time measurements collected from a network of wireless sensors is used by a sophisticated artificial intelligence system, which combines the data with a site-specific profile it has evolved, to provide closed-loop feedback of heating and air conditioning units to maintain temperatures within target ranges. 
  • Rapid and easy deployment – Components are designed to install with minimal disruption to a facility's ongoing activities. Devices automatically configure for each location, and the AI system develops a unique, and dynamic, profile of the cooling environment. The system can easily be controlled through a web interface, which provides a sophisticated, yet friendly, means of managing the cooling resources. 
  • Reduce energy costs – While optimizing cooling to yield temperatures within target ranges, the system can also significantly reduce energy costs related to cooling by up to 50% in data centers. This benefit yields a rapid payback through lower, ongoing energy costs. 

To provide a total energy management solution, Federspiel's smart control software couples a wireless sensor monitoring network- SmartMesh® from Dust Networks®. Built around Time-Synchronized Channel Hopping, this technology combines time diversity, frequency diversity and physical diversity to assure reliability, scalability, power source flexibility and ease-of-use. A SmartMesh network includes a wired network manager that monitors and manages network performance and relays data to the host application, and wireless network nodes (referred to as "motes") that relay data to and from each other and the manager.

The network nodes are ultra low-power wireless transceivers that transfer data to and from integrated sensors or controllers, and use an on-board radio to send the packets to neighboring nodes. Each node passes the packet on to other nodes, in a series of "hops" that deliver data to their destination. Pre-configured nodes can be added to or removed from the network without disrupting communications, creating a highly flexible and scalable sytem. The sensor nodes are used to collect temperature and other environmental readings. They are placed at strategic locations throughout a facility to measure input and output temperatures.

Federspiel Controls purchases Dust Networks® hardware and licenses their software on an OEM basis. Federspiel incorporates Dust Networks Smart Mesh® chips into the design of wireless sensor and control modules and resells network gateways. Federspiel supports the wireless sensor network in the field – it is a fundamental component of the company's overall system solution. When needed, Dust Networks provides the company with internal technical support.

The Telco Data Center Value Proposition

Verizon and NTT are using Federspiel Controls solution to help manage and control energy use in their data centers, which vary from 1K to 15K square feet in area. Chris Kryzan, Federspiel's VP of Marketing said, "Other telcos are indeed interested in our products. However, we can't announce any relationships without the express approval of a client partner." Chris said, "There is a significant uptake in interest in Federspiel Controls' energy management technology among telcos." This is apparently due to the unique capabilities the solution provides and its ease of installation.

Federspiel's CEO Mark Housley described the company's system as "a transparent overlay to the existing cooling infrastructure." Mark believes the company's robust energy management system is attractive to telcos because it matches their extemely stringent requirements for data center up time, availability and reliability. He highlighted the critical importance of system reliability for telcos, "If the energy management system fails, the data center could be cooked and the telco's back end network (OSS/BSS) could experience a catastrophic failure." Not good! Mark noted that the Federspiel system is extremely reliable, but if it does experience a problem, it becomes a "soft failure." In that case, control reverts to the existing air conditioning system, which will cool the servers in the data center and ensure their continued operation.

Mr. Kryzan followed on by stating, "Federspiel's sophisticated Artificial Intelligence software is the result of many years of research and development and is said to provide a powerful management solution in a multi-vendor environment. The savings it delivers in energy and expenditures is very significant, and provides a means of reducing operating costs at a time when every expense is carefully scrutinized. Furthermore, the savings begin the instant the system is turned on. Typically, the very first day after installation, air conditioners are turned off one by one, resulting in cooling energy savings of up to 50% on a daily basis."

While telcos have a rather lengthy approval cycle, with trials and acceptance tests, Federspiel is confident that their unique technology will find acceptance in energy management for telco data centers. More about this company and TiE Angels in follow up article(s). 

12 thoughts on “Early Stage Startups Get Wings from TiE Angels- Highlights of Nov 15th meeting

  1. The TiE Angels sounds similar to the Band of Angels.  With start-ups able to do so much more with so much less, this could be a good alternative to the VC world, which seem to be less risk-averse in terms of wanting "revenue-stage" companies.
    The Fiederspiel solution sounds like an interesting approach to reducing power consumption in energy intensive data centers.  I heard a story of a company who built datacenters in Iceland to solve the cooling problem (granted, Iceland also had the advantage of being a central location between Europe and North America).  Still, the point is that cooling and energy consumption are significant challenges for datacenters.

  2. Great article!  TiE Angels is especially needed now, when venture capital investments have been  declining for early stage companies, whcih need less capital than before to fund operations.  Hedge funds that previously loaned money to such companies are almost all out of business.  Hence, TiE Angels has a very important role to play
    When is the next TiE Angels meeting?
    When can you write a follow up article on Frederspiel Controls with real life application examples/ case studies?
    Excellent work!

    1. Agree with previous comment- terrific article!
      TiE Angels meeting convenor- Venk Shukla was recently interviewed by Irina Patterson.  Here's an excerpt:
      Irina: How many proposals do you receive per month?
      Venktesh: It’s hard to tell, but so far I think we have received 60 to 70 proposals over the past three months.
      Irina: Out of those, how many deserved a closer look?
      Venktesh: Well, what we do is every month, on a rolling basis, we invite about eight companies to come and present to us face to face. And out of those eight, we select three for presentation to the full membership of TiE Angels at our monthly meeting. Out of those three, typically one company gets funded.
      —————————————————————————————————————————-Seed Capital From Angel Investors: Interview with Venk Shukla of TiE Angels
      http://www.sramanamitra.com/2010/11/01/seed-capital-from-angel-investors-venktesh-shukla-chair-tie-angels-part-2/

  3. When is the next TiE Angels meeting?   It's not posted on either TiE web site
    Thanks for a very informative, well written article!

    1. As mentioned earlier, TiE Angels meets third Monday of every month except December. Anyone can become a member of TiE Angels by paying its membership fee. Existing TiE charter members do not have to pay to become members of TiE Angels.

  4. Great article!  Looks like TiE Angels is a great idea, especially consider VC firms reluctance to invest in early stage companies.
    Are there any other Angel forums/ consortiums?  Will you be reporting on more TiE Angel meetings?
     

  5. Can someone from TiE Angels please reply to the questions asked by commenters?  And can we get additional info on previous companies that presented at monthly meetings? Thanks for the very useful info in this excellent article.

  6.  Is There a Bubble in Web 2.0 Startups?

    Over the past 18 months, angel investors have leap-frogged over VCs to offer seed funding to startups seeking very small chunks of capital. Since the term “angel investor” simply means anyone who is an accredited investor according to the SEC, we’ve seen a ton of ignorant people get into the high-risk startup funding game.

    Of course, this isn’t much different than all the ignorant people who invest in public stocks or real estate. However, angel investing is much more challenging and the odds of winning are about the same as going to the race track. As super-angel Naval Ravikant says, “Each year only 10 startups matter.” So, if you don’t have access or didn’t get into those 10, you can bet you’re probably in one of the hundreds of thousands on the road to perdition.

    Unfortunately, it looks like a lot of people will watch their angel investments go bust. As the Nasdaq rebounded and Silicon Valley got its groove back, a huge wave of wannabes have started tossing bets at any Web 2.0 company with a sweet deck or glossy user interface. As with all investment cycles, once the “dumb” money starts piling in, it’s only a matter of time before smart money bolts like lightening and the newbies feel the thunder.

    “But,” you say, “Web 2.0 has so much potential! How can it burst?”

    Read the entire article at: http://wallstcheatsheet.com/breaking-news/is-there-a-bubble-in-web-2-0-startups.html

  7. Terrific article- very informative and well written.  Did Federspiel Controls get funding from the TiE Angels?  Will you report on all their monthly meetings?

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