One of the unexpected, unintended consequences of the Great Recession has been the opportunity given to — or forced upon — budding entrepreneurs.
Some of these owners of new dreams and fresh ideas have found their way to Tacoma Angel Network, a group of South Sound investors who meet every two months to review proposals and possibly supply early funding.
The group was formed in 2006 and counts 24 members. Since the founding, TAN members have invested some $10 million in more than 60 presenting firms.
Brian Haynes, president of Tacoma’s Rainier Connect, was named chairman of the investors’ network two years ago.
“We’re regrouping a little bit this year,” he said this week. “We’re having a membership drive. I’d say we had a very successful year. There’s been a renewed interest the last two years. Investments in the area are picking up again.”
When the group began, he said, “there was a flurry of interest.”
Now, he said, “I would say it’s renewed. We still have the core group, and we’re picking up a few new people.”
It’s difficult to quantify the profits earned on investments, he said, because the average “exit,’ or greatest returns, come after five to seven years.
“There’s a lot investment that’s not liquid,” he said.
John Rodenberg is a certified business advisor at the Tacoma Business Center at Bates Technical College. He is also on the TAN membership committee.
“People who are out of employment for the long term are looking to start a business,” he said. “They need funds for debt or equity, and we’re an outlet. There are plenty of applicants.”
Alongside that, he said, “there’s a new pool of people who are looking for places to invest.”
The process begins with an application (available at www.tacomaangelnetwork.com), which is followed by a grading process. A screening committee chooses the most likely candidates, and three are given the chance to present their ideas at each meeting.
Investments may – or may not – follow. The decision to invest is left to each member.
Members must meet a set of criteria in order to join.
They must have an annual income of $200,000, or personal assets of at least $1 million, or be a member of a legal entity, such as a family trust, with $5 million in assets.
Members pay an annual fee of $350 and are not required to invest.
As the latest membership drive begins, TAN has set an upward limit of 50 members.
“We don’t want to get gigantic,” Haynes said.
Some groups have hundreds of members and act primarily as networking venues. Some require annual investments, and others act as funds rather than allowing individual investments.
“Angel” capital differs from venture capital in that it typically comes at an earlier stage of business development. Also, with the Tacoma group, successful candidates are given the chance to work with business mentors within the network.
Investors expect a 10-times return, and prefer scalable enterprises.
Holly D’Annunzio, owner and managing member of D’Annunzio Consulting Group of Tacoma, acts as a member of TAN’s servicing committee. She joined the group two years ago.
“The word is getting out on angel investing,” she said. “It’s rewarding in a lot of ways. It brings out the capitalist in you.”
“These are not mom-and-pop businesses,” she said. “We’re not looking for someone who opens one restaurant – we want someone who will open 200.”
Most founding members of the group remain active but have given the leadership roles to a new slate of officers.
Since 2006, Haynes said, the group has seen candidates from all business sectors.
“Food, retail products, biotech, fuel, social networking, gaming, health care, professional services,” said Rodenberg.
“Nondrag windshields for trucks, after-market for motorcycles,” said Haynes. “There have been some really interesting technology plays. It’s amazing. That’s why it’s so interesting.”
Haynes, Rodenberg and D’Annunzio have all invested through the network.
“You only put in the money you can afford to lose,” D’Annunzio said.
Her first investment was not as successful as she had hoped.
“I’ve got a Ph.D. in seed capital,” she said.
“I think this is the route to the economic future of the U.S.,” said Haynes. “The money goes directly into jobs. Each one I’ve invested in, they’ve hired. It’s all leading-edge businesses. That’s what the U.S. is all about. The money is supposed to flow into the best ideas. It’s between the investor and the applicant.”
He echoes D’Annunzio.
“It’s capitalism at its best,” he said.
One of the primary goals of the network, he said, has been reached.
“This started out to prove there was a substantial investment base in Tacoma. We’ve proved that.”
C.R. Roberts: 253-597-8535 c.r.roberts@thenewstribune.com
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