‘Angels’ among us: Local leaders till an ‘entrepreneurial garden’

Market potential. High scalability. Deal flow. Due diligence. Committed funds. Co-investments.

When representatives from the Greater Rome Chamber of Commerce escort a handful of curious investors to Athens on Feb. 5, they will be joining several communities across the state talking the language of “angel investment networking.”

Sponsored and run by the Kauffman Foundation out of Kansas City, “The Power of Angel Investing” will unite leaders and potential investors from Savannah, Augusta, Gainesville, Athens and Rome.

“An angel investment group fits into the Rome/Floyd 20/20 Strategic Plan Part II,” says Lowell Pratt, the chamber’s Small Business Coordinator, “by building ‘capacity’ or the ability to raise business from the ground up from within our community.”

The chamber hosted the first public discussion on angel investing at the Symposium on Technology in November and emphasized preliminary work at last week’s annual meeting. CEO Al Hodge says the chamber will serve as the facilitator of resources as investors direct and build the program as they see fit.

Don Betts, a speaker at the symposium, is Director of e2e Works, a state-funded organization based out ofGeorgia Tech commissioned to work with all communities to identify, connect and energize potential angel investors throughout the state. The program is the first of its kind in the country, growing out of The Georgia Entrepreneur and Small Business Coordinating Network created by Gov. Sonny Perdue in 2004.

“They exist everywhere but they usually don’t call themselves ‘angels’,” Betts said in an interview this week. “It’s happening organically and independently.” By building awareness, gathering investors and promoting an area’s network or fund, the opportunities increase both for the investors and for the community in which they live and operate, he says.

Angels are accredited investors according to Securities and Exchange Commission standards with high asset holdings who are looking not just to invest money but to bring their successful experience to bear on a new operation. They enjoy building opportunity for jobs and wealth in their communities, learning from each other and investing with like-minded individuals. They know the risk associated with the kinds of ventures they are investing in but also pursue every available best practice and measuring instrument to choose projects that are worth the risk.
A different kind of capitalist

Rather than “hunting” for opportunity outside of a community, the angel investment approach has been frequently compared to “economic gardening” – growing and nourishing business from within.

Further, angel investing is different from venture capitalism in that it works on a “lower rung of the ladder” of business building, says Betts. It functions more as “seed money” for start-ups or businesses with high operating costs who typically cannot secure bank investment given the nature of the industry they are pursuing.

While venture capitalists work in investments of “5 to 10 million usually,” angels may offer “anywhere from $10,000 to $1 million in operating capital” depending on the need and potential return and typically become equity partners with the entrepreneur, says Betts. While they are involved in counseling or advising business operations, they “don’t invest in lifestyle business, “ Betts says, but rather look for ventures that have exit strategies such as potential buyout.

Angel networks have different structures and truly are “organic” in the sense that they are shaped by the people who are doing the investing – background, capital willing to invest, and particular interests. While the type of businesses that will be funded depends on the expertise and interest of the angels involved, Betts says that generally companies working in biotechnology, medical devices, IT and software are perfect fits for angel investment.

Examples of angel-grown businesses in the state include:

-Carbon Motors, a law enforcement vehicle company in Savannah.

-Atlanta-based Asankya, developing novel technology to optimize the network traffic over wide area networks (WANs).

-Garrison Enterprises, the largest provider of Environmental Health Data Management Systems in the country.

Calling All Angels
The seminar in Athens is the second of its kind already this year, the first being held in Atlanta on Jan. 19. Should the Rome group continue its preliminary work, a seminar is likely to be held here. If the local interests works fast, they may be assembled in time to join the 2009 Angel Capital Association’s Annual Summit to be held April 15-17 in Atlanta.

“Sometimes all it takes is one person,” Betts says. “In Savannah, things took off after one investment banker got involved and motivated the group. They are now many years and many projects into it.”

While Betts warns that angel investing is “not a panacea to solve every entrepreneur’s capital needs,” it is a way for a community to build jobs, create wealth and cultivate a environment rich for business mentoring and accountability.

GEORGIA ANGEL NETWORKS:
Savannah: http://www.savannahangelpartners.com/
>With detailed entrepreneur application process:http://www.savannahangelpartners.com/eArticles.php

Atlanta:
Atlanta Technology Angels: http://www.angelatlanta.com/
>With director’s blog, which includes tons of links to articles and resources:http://angelatlanta.wordpress.com/

SeraphGroup in Atlanta and Palo Alto, Calif.: http://www.seraphgroup.net/

RECOMMENDED ARTICLES:
-Economic Gardening, particular attention to Georgia’s success: Click

-Inc. magazine, January 2009, article: Click

ORGANIZATIONS:
-Angel Capital Association
-Southeast Regional Network of Angel Investment Groups
-MIT Enterprise Forum
-Kauffman Foundation
-Enterprise Innovation Institute at Georgia Tech

(Published on Hometown Headlines 1.28.09)