Knox Massey on the (good) climate for start-up funding

We asked Knox Massey, managing director of the Atlanta Technology Angels, about the environment for start-up funding. Founded in 1998, ATA now has some 60 members, including current and former CEOs of technology companies. It has invested more than $20 million in some 40 Georgia-based start-ups, including SilverPop, a developer of sales and customer communications software, and Jacket Micro Devices, which makes components for wireless communication. More on angel investors, who they are and where they invest, in Deborah Cohen's Small Business, Big Issues this week.

Q: Are the emerging soft spots in the economy impacting angel investing?

A: You have a lot of information in the press about the subprime mess. I don't think that's yet to affect something like what we do, which is invest in early-stage companies. I'm not seeing a slowdown in interest in this type of investing. I have more members in my group than I've had in quite a long time.

Q: What is the preparation process like for companies you look at?

A: Four to six members will screen them early in the process. We spend two to four weeks working with the company. Is it something that we can understand, do we like the founders? From there, we bring them in for a formal meeting. From there, if there's a high level of interest, we'll take them into a due diligence phase, with a little bit more detail. From there, they'll be an investment.

Q: How long does it take you to decide to invest?

A: The quickest we made an investment was two weeks. More typical is two to three months from when we meet them. We've worked with companies that may not be ready for up to a year. We don't want put somebody who is not ready in front of the group.

Q: What type of exit strategy are you seeing these days?

A: It's primarily an M&A strategy right now. You need to identify early who the potential acquirers could be.

Deborah Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com