Friday, November 25, 2011

'Angel' investing may be an option for some. Here's how they do it in Portland, Ore.

On the list of investment opportunities, putting money into "angel" funds ranks over on the risky side of the spectrum. Having said that, if you have a spare $5,000 sitting around doing nothing you might consider looking into angel investing. The experience would not be so much for the potential return on your money but for the learning opportunity as a participant in the selection and mentoring process associated with a start-up.
Angel funds in general invite investors to pool their money in a loan fund, which is then meted out to promising entrepreneurial early stage businesses. These businesses are usually too risky for banks to consider but have potential worth supporting. The money goes to such things as general financing, business growth, product development, hiring and operations.
Angel Oregon LLC, a Portland-based angel investment group, is soliciting 2012 investors and is hosting an informational session this Wednesday, Nov. 30 from 5-7 p.m. at the Lane Powell offices downtown. If you want to attend, contact Julie Brown at Oregon Entrepreneur's Network at 503-222-2270 or julieb@oen.org. Angel Oregon is a collaborative part of OEN.
So how does Angle Oregon work? Pretty much like any angel group.
This year Angel Oregon is hoping to raise $325,000 with a minimum of $200,000 to be invested in a winning "launch stage" company, says Shelley Gunton, Angel Oregon co-chair.
Over an eight-week period starting Feb. 6, 2012, investors review between 20 and 30 start-up companies. Through a thorough review process (due diligence) the field of competitors is narrowed to between five and seven companies in two categories: Launch stage companies and concept stage companies.
These finalists then present at the Oregon Entrepreneur's Network conference on Wednesday, April 18.
The event draws 300 investors, business students and others. The outcome produces the winners of the Angel funding.
Typically the investment is made in the form of a convertible note and converts to equity as part of a "qualified equity financing," said Gunton. Investors often remain involved with these companies as advisors and board members.
So what's the possible reward for a $5,000 investment? The payback typically may not come for five to seven years, when and if the company sells stock shares.
Gunton said Angel Oregon typically sees 50 to 60 people in the annual investment pool but women make up only a small portion of those investors. "We want to see that increase," Gunton said.
The angle experience gives investors a unique insider opportunity to be engaged with a start-up business that has the potential to success.
"Our angels come from a variety of backgrounds, which adds immeasurably to the experience for everyone," Gunton said. "The common factors are curiosity, the desire to help early stage companies, an interest in expanding their personal networks and the opportunity to investment," she said.
Investor meetings kick-off on Feb. 6 from 5-7:30 p.m. at Lane Powell in downtown Portland. Meetings include presentations by participating companies, discussions on due diligence by investors, voting at certain milestones in the selection process and networking.
There are angel investment organizations throughout the U.S. In these challenging economic times, they appear to be playing an even bigger role in supporting start-up businesses with great ideas that need financial backing. Typically in the old days, investment minimums were much greater in the $25,000 and $50,000 range and appealed only to the wealthy who may have had success with their own start ups.
Now with $5,000 minimums, the outreach is much broader and may even be more rewarding for all involved from entrepreneurs to investors.
For more information about Angel Oregon, contact:
Shelley Gunton at shelley.gunton@castorpolluxpet.com or Drew Smith at drewcsmith.@gmail.com
For MORE ON ANGEL INVESTING:
"Angel Investing: Matching startup funds with startup companies" by Robert Robinson, at amazon.com.
Angel Capital Association
"What's an Angel Investor" from the Wall Street Journal.
Angel Investing 101 from NBA&I.

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