What is Arizona Tech Investors (ATI)? The largest Angel Group in AZ with about 100 members

How large is your check size? 4 of our last 7 investments have been between $188-$253k. With 3 outliers. See below”

What has ATI invested in Recently:

• Joylux V*: $215,000
• Perceptive Med II^: $252,500
• Bold Street (AZ): $112,200
• Pneumeric: $187,500
• Lenoss: $219,500
• Salt Athletic: $558,000
• Delta Development (AZ): $149,000

*Represents a 5^th ATI investment in this startup
^Represents a 2^nd ATI investment in this startup

Why does your check size vary? We are not a fund. We are a group of about 100 members that make individual decisions to invest, and how much.

I don’t want 100 names on my cap table. When we invest, we form a special purpose vehicle in the form of an LLC to invest. So, we are a single entity on the company’s cap table, which founders really like. Sometimes 4 members participate in the LLC, and I think our largest was around 40 LPs investing.

Do you lead deals? Normally No. An outlier is Salt Athletic above where we wrote the terms, and lead the round, investing $558k of the $750k total raise. With a typical check size in the $200-$250k range, we like to be the last money in.

Do you only invest in AZ-based companies? No, 5 of the 7 listed above were out of state startups. In general, if you are based outside of the state of Arizona, we need to see a lead investor in place (having negotiated the terms and funded) to begin screening.

My company is based in Canada, will you screen me? No. We don’t evaluate or fund startups based outside the US.

Any other Disqualifiers? Of course:

1. Due to a lack of investor protections, ATI does not invest via SAFEs. We don’t care about post-money SAFEs or side letters or Y-Combinator. We don’t like SAFEs. We invest in convertible notes and our preferred habitat is priced-rounds.

2. No LLCs or S-corps – they lead to tax issues for us. Only C-Corps. By and large we don’t care if you are incorporated in Delaware, AZ, NV, etc.

3. No Common Stock. Preferred stock is for investors, common stock is for founders
4. We don’t sign NDAs. If your attorney is asking for an NDA, you are getting bad advice

5. No complicated structures. We want plain vanilla

6. No Crap terms. Let’s take a look at some Convertible Note examples that fit the bill:
   
   1. 2% Interest – not interested
   2. No cap in conversion – Nope
   3. 5-year maturity – 24 months should be the max
   4. 10% discount – Not attractive, 20% is standard (sometimes higher)

7. No Crazy Valuations. Story: I drove by an attractive house for sale that I was interested in. The problem was that they were asking $1.5 million, and I thought it was worth $750,000. We were so far apart that I didn’t even make an offer, simply drove to the next house. Get the picture.

What is the process for startups? The most common steps are outlined below. Applicants may drop out of the cycle at any stage, generally due to a lack of further interest by our members. We take screening & due diligence seriously. Once a pitch is seen at the membership meeting, we’d like to get to closing within 6 weeks for the ideas that we do move forward with. Again, many will fall out if we have insufficient member interest.

General Steps in our Startup Funnel:

1. Initial review of pitch deck, if a fit
2. Encourage an application in Dealum (the platform where we manage the funnel)
3. Screening Committee evaluates; written application, pitch deck, cap table, projections, etc
4. 11-Member Screening Committee sees a ‘pitch’, if interesting…
5. Pitch to general membership, with interest…
6. Deeper dive (1 hour Q&A), with interest…
7. Due Diligence Team Formed
8. Due Diligence Memo Written (2-3 weeks) & circulated
9. Call for commitments
10. Form an SPV and fund the company

Who picks the ideas that advance to the general membership meeting? We have an 11-member screening panel for BioTech, and an 11-member screening panel for everything else (SaaS, Hardware, Deeptech, etc.). This provides a balanced perspective with domain experts on each screening team.

Are there sectors that ATI doesn’t invest? Yes; Real Estate, Crypto, Precious Metals, BioPharma, and others. No hard and fast rules, but we like businesses that have a moat, are capital efficient, can scale, and get to an exit in 3-5 years. We’ve mostly stayed away from businesses needing a ton of capital or that have extremely long time horizons to exit.

What type of returns are you expecting? We are looking to earn a 25-30% IRR. So, while we could state a 10x or 20x multiple of capital, it is the time horizon to exit that determines the IRR. For example: A 3x return on capital over 5 years leads to a 25% IRR. The same investment over 10 years would need a 9x return on capital to equal the same 25% IRR. We’d like to see our portfolio companies exit in 3-5 years.

Where can I email my pitch deck? [email protected]
Attach your pitch deck, include your contact information and anything else you feel is pertinent.