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Titan Angels — Idea and Formation

We founded Titan Angels because as a group of California State University, Fullerton professors, alumni, and donors we have seen too many great ideas from members of the Cal State Fullerton community fail to get off the ground. But these failures weren’t due to a lack of skills or drive; we believe that the missing ingredient has been a lack of funding.

This is why we created Titan Angels.

Investment Goals

Titan Angels is a "seed fund", so it is intended that many of the investments that we make will be made prior to Series A funding. Our goal is to make approximately one-third of the capital we invest be in "Pre-Angel" investments and approximately two-thirds of the capital in "Angel" investments.

We seek to hedge our risk by looking for ideas that fit two criteria:

  1. Can be pivoted in multiple directions.
  2. Have large markets or several identified buyers. We also have a preference for investments and founders that want to achieve some sort of social good.

Anticipated Schedule

The anticipated life span of Titan Angels will be ten years.

In the first three years, Titan Angels intends to retain as much capital as possible and reinvest all returns.

From year four and beyond, Titan Angels intends to distribute profits when liquidity events occur.

Sources of Deals

We will draw from the network of our investors that have deep roots within the Cal State Fullerton community. The founding members of Titan Angels have strong connections with the students, professors, and alumni who are launching businesses.

Titan Angel’s founders will also seek out recommendations from other members of Titan Angels on prospective deals. We adamantly believe that the investors in Titan Angels will be a tremendous resource in this regard because they are passionate and well connected members of the Cal State Fullerton community.

Investment Process

Any member of Titan Angels can "refer in" a potential deal and hear an initial "pitch". We will have an expanded "pitch panel" of investors to do the first filtering of ideas. If a startup receives a positive review from the “pitch panel” then the vetting process will begin and an investment in said startup will be considered by the Titan Angels Investment Committee. We intend for most, if not all, of our early stage investments to take the form of convertible debt that can be converted to equity once certain milestones are met.

Ongoing Management

Every company added to the Titan Angel portfolio will have at least one Titan Angel on its board. While we are not an incubator, having our voice at the table is important and the portfolio company will also benefit from the knowledge, wisdom, and connections that a Titan Angel brings. Since the deal outlined milestones to be achieved, subject companies will be expected to report on their achievement or road blocks to accomplishing the milestones. Meetings and check-ins are variable, based on the time frame set for the milestones.

Project management software will automate some of the reminders and deadlines to ensure visibility of progress made by portfolio companies for members of Titan Angels.

Fund Operations

In keeping with our spirit, the fund will operate in as lean a method as possible. With assistance from outside legal counsel, the manager of the fund will maintain the books and records of the group as well as file any and all reporting necessary.

Becoming a Titan Angel

While we are not required to have accredited investors in our fund, we still must demonstrate that our investors are "sophisticated" and understand the risks involved in this form of investing. Our attorneys have prepared a standard package of documents that all investors must sign before investing. There will be a short vetting process for investors into the fund. After receiving the initial "pitch" (either at an event or from an existing Angel), interested parties should contact investors@titanangels.com. Either one-on-one or in small groups more details will be discussed and questions answered. The "due diligence" phase includes the potential investors receiving the investor kit, which includes the legal documents and filling out a short questionnaire about themselves including: contact information, investment/business background, desired investment level.

Investor Relations

A quarterly update will be sent to all investors, via email, giving them a status update on the fund. It will include a summary of important actions for each portfolio company, along with a summary of milestones achieved or missed. It will also include basic financial statements on the fund and its operations.

Due Diligence Process

Fill Out Application

Owner/Founders/Team Members Names and Contact Info; Job Duties and Brief Background on Each; Executive Summary of Idea; Current Status: Entity type, Funding Amounts, Source, Stage (idea only, business plan, GTM, in production)

Initial Meeting and Investment Committee

After the application is completed, the applicants will be scheduled to meet with members of the investment committee (and/or other advisors, as necessary).

The goal of that meeting is to gauge the coach-ability of the owners, discuss the idea in more detail, and begin providing a framework for how a deal might be structured.

Assuming the meeting goes well, "homework" is assigned, typically a review/revamp of the business plan or the creation of a business model canvas.

Follow-Up Meeting

Scheduled with the application, the follow-up meeting is designed to review the "homework" from the previous meeting.

The goal is to see how well they execute on the advice they get and their ability to get work done.

Investment Committee Review and Terms

The Titan Angels Investment Committee is tasked with determining which investments to make and to create a term sheet for the companies it wants to add to the Titan Angel portfolio. The terms sheets of Titan Angels’ investments will look a little different than traditional VC term sheets. As normal, it should outline the terms of the deal: amount invested, form, terms, expected use of funds, and milestones.

In addition, it outlines the strategy that Titan Angels will take in helping the company become profitable. It is critically important that both the Titan Angels and the applicants understand what direction the company is expected to go. At the end of this meeting the vote will take place to approve the deal.

Presentation Meeting

A meeting to present and negotiate the terms of the deal.

Data Gathering and Execution Meetings

As necessary, upon acceptance of the terms, the company will be funded and work will begin.

Pre-Angel Investments

  • Anticipated to be $10,000 to $50,000 per portfolio company.
  • Funding will be primarily to allow the portfolio company to establish its infrastructure (form entities, legal agreements, etc.).
  • Funding will be designed to help the founders cover hard costs while they put together a workable business plan.
  • Investments will occur in conjunction with some sort of mentorship program and are contingent upon completing the program.
  • Investments are intended to be primarily convertible debt, to be repaid back if the founders do not complete the program, and to be converted to equity if they do.

Angel Investments

  • Anticipated to be $25,000 to $100,000 per portfolio company.
  • The company is ready to launch and has a viable business plan.
  • The company may need prototypes, market research, initial development costs, etc.
  • The investment is anticipated to be a combination of debt and equity, but the form of investment may vary for each transaction.
Titan Angels | PO Box 3699 | Fullerton, CA 92834