Rich Diemer is frustrated. He’s had it with a few of the ideas people seem to have about investment group Cav Angels. And truth be told, that discontent has him fired up to change many minds.
Not officially endorsed by the University, Cav Angels is an affinity group and not-for-profit club made up of private investors, entrepreneurs, and executives from UVA alumni, faculty, parents, students, and friends driven by a desire to actively contribute, provide access to education, and initiate networking around private, early-stage company investments.
One of its major aims is to grow the robust UVA startup community by offering its members opportunities to fund startups founded, owned, or managed by members of the UVA family through its virtual angel investment platform and administered under a separate for-profit LLC. The platform offers investment access without boundaries; while the group maintains a local presence on Grounds, the virtual connection creates a national footprint that stretches into cities across the country and offers its members access to global opportunities as well.
But Diemer, Treasurer and Co-Chairman of the Board, with Co-Chairman and Founder Jim Cheng (Darden ’87) and Chairman Emeritus and Founder Dick Crawford (A&S ’67, Darden ’75, Law ’75), fully believes that it’s time to take their efforts to the next level.
“I’m calling it Cav Angels 2.0 because for too long, whenever someone describes us, we’re always this nascent group of people who want to do good for UVA,” he says. “I’ve been involved for three years, so it can’t be nascent anymore. I have a passion for the University. I like to give back.”
Another misperception that the Comm School alumnus is ready to change concerns the notion that the group is an arm of the Darden School of Business. He notes that while the co-chairs held their weekly meetings at the school’s Abbott Center Dining Room, Cav Angels works with many entrepreneurs and programs that extend well beyond the walls of Darden. It already counts among its collaborators people from the schools of Engineering, Batten, Curry, Medical, and, of course, McIntire, where he is intent on cultivating a stronger presence than they have had in the past.
In fact, Diemer says that the group’s most recent activity in support of a young McIntire alumni star’s venture represents the largest investment Cav Angels has ever made. The group is fast approaching $1.5 million in investments to date for 2020, and during its three-plus-year history, has contributed approximately $3.5 million cumulatively to early-stage ventures.
A Little Luck, A Lot of Experience
Having celebrated his 40th UVA class reunion this year, the eldest son of seven children, Diemer was a first-generation college kid who began his studies in his native New Jersey, commuting to Rutgers University. Between his first and second year attending, he and his girlfriend, Adele—who later became his wife, now of 36 years—won $10,000 on a lottery scratch-off from a 7-Eleven convenience store where he worked. He decided to use his half of the jackpot to explore accounting programs farther afield than his home state.
He applied to two universities: UVA, “because of the Comm School,” and Georgetown, “for obvious reasons.” It was where Adele was studying.
He and his brother decided to take the kind of whirlwind trip that young people are more apt to try, and drove south to see both schools before heading back to New Jersey on the same long day. Ultimately, Diemer was accepted to both universities, but he chose UVA and still seems gleeful about the decision.
“There are so many things that have happened in my life because I went to McIntire,” he says.
One of those eventualities was becoming a member of the McIntire Advisory Board in 2015. Another was coming on board with Cav Angels.
What led him to it? In his professional life, Diemer spent 17 years in public accounting as an Audit/SEC Partner at KPMG, exiting to join AlliedSignal, which merged with Honeywell, where he became Vice President, Corporate Controller, and then CFO of the company’s Specialty Materials segment. He also served four years with Honeywell Capital Management, overseeing an equity portfolio of more than $15 billion, “largely overseeing outside managers and trading $500 million of it ourselves,” he says. As a chemicals industry senior finance executive, he’s been in the middle of creating more than $7 billion in shareholder value.
Through personal connections that led him to purchase property in Charlottesville, and a friendship with former classmate and Cav Angels’ first female accredited investor member Patti Cary (McIntire ’80)—the group now has four female members, three of whom are also Diemer’s Comm School classmates—he learned his skills were very much in demand by the group. Diemer, in turn, was interested in getting more involved in angel investing and becoming more hands-on in his giving back to UVA. It was a perfect fit.
“Dick [Crawford] and Jim [Cheng] needed somebody who had my background—and I trained as an accountant,” he explains. “I’ve been the CFO at three businesses: two public and one private that went public. And now, I invest my money, family and friend money, but I had a gap in my portfolio because I didn’t have any of these early, seed-stage, angel investments.” He notes that angel investments don’t readily lend themselves to the valuation methodologies that are applied to public companies, but he was eager to discover all he could about them.
“I learned from Dick, who’s the father of angel investing in Central Virginia. I learned from Jim, who’s the former Secretary of Commerce and Trade to the Commonwealth of Virginia. Jim will fund anybody with a good idea that needs some money, because that’s what he does and is successful with it. He knows everybody, and he’s a source of many of the deals that we consider.”
With many of the ventures Diemer has supported, he says he’s invested side by side with Cheng. The results from joining the group have shown to be successful for him in many ways.
“What I really like doing is working with teams that come to us for funding. Once they get through due diligence, we take it to our members. I know what they like. I know what they’re good for, and I help them match up with the deals that I think that would be good for them. It’s proven that a diverse portfolio of due diligence deals can return in excess of 20% annualized over the long run—and we like to think that dealing with UVA entrepreneurs give us a better shot at that as a long-term goal,” he says.
An additional benefit of those kind of returns from investments that fund innovative UVA-related entrepreneurial initiatives may allow alumni extra flexibility in their own planned giving to the University.
Visionaries Converge Often
Let’s get back to that major investment the group has recently undertaken. It concerns Josh Anton (McIntire ’14), Founder of ascendant location data company X-Mode, and Cav Angels’ recent investment in excess of $750,000.
Diemer identifies with Anton, as both came into McIntire as transfer students and they’re both full of boundless energy.
“I don’t think he ever sleeps, and there must be four of him,” he says of Anton, due to his tireless efforts to grow X-Mode into a company beyond its original campus safety origins. The business then shifted from ad tech and into its current slate of partner-ready applications that have already shown reliable data use in contact tracing to help contain and monitor spread of the coronavirus. The copious possibilities of the company’s newer prospects drew strong attention from Cav Angels after Cheng reintroduced the opportunity to his fellow members, which Diemer subsequently championed.
“X-Mode is our largest individual investment as a group by far. Josh knows how to do what he’s doing, and he also knows you need early investors to make money. For a 29-year-old, that’s pretty good. I’ve seen many older people who don’t think that way. I think it’s because he’s a smart guy and because he went to McIntire.”
In addition to Anton’s X-Mode, Cav Angels has also brought many of the startups the group has considered, researched, and/or invested in to another of Diemer’s prosperous classmates, Mark Galant (McIntire ’80). Many of those UVA-related entrepreneurs have regularly won investment deals in the Galant Challenge pitch competition, for which, coincidentally, Diemer and Cheng have served as judges on occasion.
One such good news story startup is PurPics. Founded by duo Victor Layne (McIntire ’20) and Aneesh Dhawan, PurPics’ web app, designed to connect social media users with businesses to raise money for nonprofits, received angel funding at the 2018 competition. Although Diemer admits he doesn’t fully grasp exactly how the app works, he was swayed by the presenters. He recalls Galant asking him if he and Cheng planned on investing in PurPics, to which they replied in the affirmative. The caveat?
“I said to Mark, ‘We’re happy to invest in this—only if you join Cav Angels.’ Mark agreed.”
Generating Value on Grounds
Equally as important as supporting startups, education remains central to the aims of the group, as expressed in its mission.
Diemer says that for the last several years, Cav Angels has been instructing members of the Virginia Venture Fund (VVF), a highly selective, McIntire-affiliated organization for which interested first-year students apply. Those undergraduates who are accepted actively participate in unique learning experiences that teach them about venture capital and the due diligence process.
“Part of what the VVF does focuses on the hardcore venture, early investing stuff. We come in on Sundays and do training programs to teach them how to do due diligence, helping them with ideas around valuation, legal documentation, understanding different types of legal entities, and the investment implications from LLCs to C corps. And then they usually assign a couple of their people to work on our projects.”
VVF students conduct what he calls “macro due diligence,” paying more attention to markets than business models. This last year, they worked alongside Darden MBA students who were also embedded in that process, Diemer explains.
Cav Angels plans to continue the training programs and intends to give students from the VVF more opportunities to work on upcoming projects.
In addition to the training sessions, Cav Angels also launched a mentoring program to connect alumni with students. Diemer began mentoring informally a few years ago; Sambriddi Pandey (McIntire ’22), whom he was introduced to through the VVF when she was a pre-Comm student, has since become a venture intern with Cav Angels.
The Big Picture
Diemer is understandably optimistic that all schools across the University will want to connect with the investment group—that is, if they haven’t already.
He’s got an impressive list of interested parties that show the group’s proactive slant and prove its growing popularity. They recently invested in a company called DiveTech, launched by a former military member and Darden graduate who started his own company to create an unmanned underwater vehicle that functions without a ship at the surface to support it.
Then there’s interest coming from the Engineering School. The potential for entrepreneurial students and graduates who might look to Cav Angels to fund their ideas has increased, no doubt due to the group’s newest member, Engineering Professor Chip Blankenship.
And there are even more reasons for high expectations.
“We have the confidence of the Batten School because Professor Christine Mahoney, who is an expert on ESG [environmental, social, and governance] investing at the University, knows we have a couple of high-profile ESG opportunities in our portfolio, and has committed to being a regular participant in our weekly working group Zoom meetings.”
Diemer says that he’s determined to raise the group’s profile at the Comm School among potential investing members as well as current and future entrepreneurs who seek support. “I’m hopeful we’ll get buy-in from McIntire. I’ve already reached out to the new Dean, Nicole Thorne Jenkins. I like the fact that she trained as an accountant and has practical industry expertise. It resonates with me.”
Within the group itself, he’s enthusiastic that two members with MD MBAs joined in the last several months, strengthening the group’s ability to conduct due diligence on ventures in the medical space.
“[Executive Vice President for Health Affairs] Dr. Craig Kent really supports entrepreneurialism and healthcare, and we’re going to have a formal program with MD MBAs, or doctors who need to be a little bit more in tune with the business opportunities that might be out there. So we’ve got the Medical School.
“And I’ve got to mention the Curry School,” Diemer adds excitedly. “A company we invested in recently, Trilogy Mentors, is an all-in-one platform for tutoring groups and freelance tutors to enable virtual tutoring. The founder was mentored by [McIntire Professor] Eric Martin. When we pitched the company to our members, Eric introduced the founder. Who better to do that than your real mentor and a member of the UVA community? The Chief Learning Officer of Trilogy Mentors is out of the Curry School, so now I can include that school, too.”
Individually, Diemer regularly gives to the University. But he believes the success of Cav Angels will empower him, and indeed, anyone interested in fortifying UVA’s entrepreneurial landscape, with the added leverage to increase their gifts and make an even greater impact.
“Doesn’t it make immense sense to have a way to fund and support early-stage ideas?” he asks.
The logic of drawing support back to the University’s startup community has the potential to produce a virtuous cycle without limitation, an abundance without end. And if you’ll forgive the cheap pun, the idea sounds as if it should also make a lot of cents, which from the way Diemer tells it, quickly equals plenty of impactful dollars, too.