Scott Sandler - 2017
Thorough diligence is a cornerstone of successful investing - and a hallmark of the Oregon Angel Fund. OAF's thoroughness is born of our collaborative model, which harnesses the vast wealth of talent and experience that our investors bring to the table. But as with any project involving lots of people, OAF diligence could become chaotic and time-consuming if not carefully choreographed.
Over the years we've taken some heat for diligence that has at times taken too long. It's a simple fact that there is always more one could learn to inform such consequential decisions. But it's also true that continuing to "kick the tires" is detrimental to all involved, and undermines one of OAF's principal values: to make every interaction an extraordinary and rewarding experience.
Balancing the equation of time and care is inherently tricky. The need to prudently consider many facets of each company - people, markets, products & services, technology, business model, operating plan, and funding strategy - naturally impels us to take our time. But the advantages of making timely decisions compel us to move briskly: it lets us consider more opportunities, lets entrepreneurs' pay more attention to their businesses instead of fund-raising, and provides more satisfying experience for all involved.
Recently we've focused on streamlining our diligence process to speed it up and make it more predictable while still achieving the thorough understanding that leads to great investment results. Two keys make this possible: a growing roster of investors with deep expertise in a wider range of business sectors; and introduction of diligence "sprints" that begin only when we're pretty sure the team and market opportunity are conducive to the superior returns that we seek, and are completed within a just a few weeks.
With younger companies that are still developing their business plans, we get to this point by building relationships over time and learning as much as we can prior to beginning an intensive sprint. With more mature companies that feature experienced management teams we can often move into a sprint shortly after we're introduced.
OAF diligence is structured but flexible. There are standard elements, yet each effort is customized to the company and the diligence team. And though it's usually the case that time is of the essence, diligence can be spread out when entrepreneurs are swamped with business priorities; we always apply our version of the Hippocratic oath: first, do no harm to the business!
To be quick and efficient and respect everyone's time, we assemble a tight team of highly qualified OAF investors and identify a lead (or sometimes two) to be responsible for the investment from diligence to exit. The lead is generally the person with the most experience in the sector and greatest ability to understand the key issues during diligence and help the company grow after we invest. Utilizing the talent and experience of investors to hone in on key issues, we avoid wasting time on obvious or irrelevant details.
Gathering a group of really smart people to work on an interesting and important problem or question is one of the most rewarding things any of us can engage in. OAF diligence is a great example - as long as we can avoid the potential pitfall of paralysis by analysis. Recent results indicate that our dedication to continuous learning and improvement is paying off with faster decisions and better diligence experiences for all involved.