ORGANIZATIONAL STRUCTURE

BlueTree Allied Angels (Allied Angels) is a regional group of accredited investors who desire to invest in regional early-stage companies. Membership is by invitation only. Each “investor-member” must be financially capable of making early-stage investments and will be required to complete legal documentation confirming status as a “qualified investor” to meet regulatory requirements, Rule 501 of the SEC regulations.

The membership meets 10 to 12 times during the year to consider two to four private equity investment opportunities per meeting. The members collaborate on deal evaluation and due diligence but decide individually to invest in presenting companies with other “member-investors” as a group. Each group investment is treated as a separate LLC/LP.

BlueTree Capital Group, LLC provides the professional staff to facilitate and manage the Allied Angels organization. BlueTree Capital Group organizes and coordinates the group meetings, the entrepreneur screening process, and the due diligence process, while also providing “portfolio status reports” to the membership and managing the Allied Angels’ website.

BlueTree Capital Group has engaged John May, the managing partner of the New Vantage Group, as a consultant for guidance and to ensure on-going success. John May has successfully started five angel networks in the Washington/Baltimore area and is the co-author with Cal Simmons of the book entitled, Every Business Needs an Angel.(Crown Business:2001) John is frequently engaged with the Ewing Marion Kaufmann Foundation to help coordinate national and international angel summits and to assist in the Foundation’s research efforts.

MEMBERSHIP

Allied Angels is designed to attract the most active and serious investors from diverse backgrounds. BlueTree Capital Group strives to reach cashed-out entrepreneurs, professional service providers, closely held business owners, general partners of venture capital firms, merchant bankers, and industry specialists. Allied Angels is a member-sponsored organization, and membership is by invitation only.  

MEMBER BENEFITS

Access to Quality Deal-Flow – Allied Angels enhances a private equity investor’s exposure to quality deal flow. BlueTree Capital Group has developed relationships with many key members of the local research and business community to add to deal flow. Fellow members refer attractive opportunities to the group to enhance deal-flow. Also, entrepreneurs can easily apply for presentation to the group via the BlueTree Allied Angels website. Only companies that have been screened for investment criteria can present at the membership meetings. (See “Screening Process.”)

Increased Capital Rounds/Diversification - One of the most significant risks of individual angel investing is raising enough capital to provide time for an early-stage company to become profitable or reach necessary milestones for follow-on investment. By gathering a larger group of investors and investing larger amounts of capital, Allied Angels helps “lengthen the runway.” Furthermore, members can enhance the diversification of their own portfolio because they can spread their capital into many different options.

Valuation/Terms - The Allied Angels are able to consolidate local investors' deal flow and speak with a single voice. By offering the capital and connections of all members via an efficient process and clean deal structure, investors are able to negotiate more attractive terms and valuations with applicant companies.

Investment Follow-Up/Reporting - After a transaction closes, either an Allied Angels member or one of the BCG managing directors typically will take a seat on the company's board of directors. In addition to assisting in the company's growth and typical board duties, these board members will be responsible for ensuring the company meets its reporting requirements and for assisting in the distribution of this information.

Power of “Mind-share” - The mission of Allied Angels is to provide opportunities where members can obtain outstanding financial returns while mitigating risk. Members bring a variety of experience and knowledge to the deal table and strengthen the evaluation process and the negotiation of terms----- that’s the power of “mind-share”.

Networking with Colleagues - Angel investors themselves receive more than formal association with fellow investors from membership in an organized group – they get camaraderie, an opportunity to share experiences and a forum for socializing. There is added value to hearing about a number of deals and further discussing community service, philanthropic endeavors, or economic development issues.

Self-selection of Investments - Individual members choose to "opt in" to investments on a deal-by-deal basis.

MEETING PROCESS

Meetings are organized as monthly dinner meetings or breakfast meetings to hear entrepreneur presentations and review the portfolio status. A screening process selects presenting entrepreneurs. Prior to the meeting, members will have received an executive summary and other supporting materials via e-mail. After hearing the entrepreneur’s presentation, there is time for questions and answers. Members then discuss the entrepreneur’s presentation, express a non-binding interest, and volunteer for the due diligence process led by the BlueTree Capital Group. The due diligence report is e-mailed to members and presented at a subsequent meeting, after which each member can opt to invest individually. BlueTree Capital Group will organize the member investment LLC/LP structure and act as its manager. Members of the investment LLC/LP can volunteer to provide oversight and assistance to the entrepreneur and his/her company.

PRESENTING COMPANIES

Presenting companies/entrepreneurs most often will be in the earliest stage of growth. These companies are expected to provide a large equity-for-investment ratio. The primary focus of the Allied Angels group is to invest in early-stage companies with significant growth potential in large markets. Presenting companies can be sponsored by a member or have contacted BlueTree Capital Group where they have been properly screened for presentation at a member meeting. 

SCREENING PROCESS

Members can volunteer to serve on the Screening Committee that meets two weeks before the regularly scheduled member meeting. Company screening criteria will typically include, but is not limited to the following:

• Company headquarters in Western Pennsylvania, Eastern Ohio, or Northern West Virginia
• Experienced and talented management team;
• Beta product
• Business proof-of-concept via customer sales commitments
• Visibility to cash flow breakeven
• Clear exit strategy
• A minimum of +10 times return expected within 3-5 years
• Primary operations in targeted industries aligned with the Allied Angels’ membership interest
• Investment requirements between $200,000 and $1,500,000
• A pre-money valuation of less than $5,000,000

INVESTMENTS

Individual members choose to "opt in" to investments on a deal-by-deal basis. The group may co-invest with established venture capital firms, other angel investing groups and other sources of capital, or may be the lead investor.

When Allied Angels’ members decide to make an investment in a presenting company, BlueTree Capital Group will prepare a Letter of Intent (LOI) and a term sheet for the investment in the company. If the LOI is signed, BlueTree Capital Group will then form a one-time partnership/LLC as a conduit for the members’ investment. Each Allied Angels Investment will be made through a separate investment vehicle, e.g., Allied Angels Microsoft I, Allied Angels Intel II. An investor must be a member of Allied Angels to make an investment in a presenting company. If the investment is done in cooperation with other investment groups, a term sheet from the other investment groups may be utilized.

MANAGING COMPANY

BlueTree Capital Group provides the professional staff to facilitate and manage the Allied Angels organization. BlueTree Capital Group is responsible for managing the group’s pooling of funds and investment operations. BlueTree Capital Group organizes and coordinates the group meetings, the entrepreneur screening process, and the due diligence process, while also providing “portfolio status reports” and managing the Allied Angels website.