In April 2008, Craig Reilly was ready to take the next step. Reilly and his two partners had gotten the company that far with their own money but had begun looking for investors to fund more growth.
Reilly turned to a group called the Winter Park Angels — an organization comprised of affluent local residents who had come together to fund local startups and emerging companies.
Five months later, 19 members of the angel group had invested a total of $750,000. Reilly was able to expand even as the financial markets crashed and financing options evaporated. Reilly’s company, Plus-One Solutions has met its growth targets and is about to undergo another financing round to fund more expansion.
The Winter Park investment group is just one of at least nine local angel bands that have emerged in the past several years, meeting formally or informally to pool money and invest in local startups. Two new angel funds formed in Florida in the last year with more than $1 million each to spend on both initial funding and later-stage expansion.
Angel investors, either as individuals or groups, typically look for entrepreneurs who want to build a company then sell it. For their investment, the angels get a share of ownership, looking for a return of as much as 30 times their initial investment within seven years.
Meanwhile, for Florida businesses, angel groups help to mitigate the traditional lack of capital for promising new businesses in the state. "For entrepreneurs, it's the smartest money you can get," says Rhys Williams, president and co-founder of New World Angels, a Boca Raton group. "You could be getting 40 investors committed to your success who use their networks to grow the company and who will help you find the next round of capital."
In Florida, the oldest angel investment fund is in Jacksonville. Springboard Capital has invested in 12 startup companies over the last decade. The group began informally, a cadre of friends talking deals over sandwiches, and later organized as a fund when 45 members put up at least $50,000 each. The group formed a second fund a few years later.
For the most part, angels like to invest in companies whose business they know something about. In Orlando, for example, Catapult Capital has tapped into breakthrough technologies and entrepreneurial deals vetted by the University of Central Florida venture lab and Rollins College.
A new fund in southwest Florida, Tamiami Angel Fund, has members with varied backgrounds and wants early-stage, pre-revenue companies with evidence of customer demand or businesses looking to expand.
At least two of the angel groups in Florida seek women-owned business. Go Beyond Network in Naples and Women Angels in Miami, both founded by women, see opportunity in this fast-growing sector. Barbara Boxer, founder of Women Angels, says the economic downturn has proved to be a great time for angel groups with cash to spend.
Others funds prefer to invest in one industry. A group of Miami angels led by healthcare entrepreneur Mike Fernandez formed the $20-million MBF Healthcare Fund aimed at investing in healthcare startups in Florida.
Sean Christiansen of Catapult Capital in Orlando says his angel group wants to raise awareness that the groups are a viable, local financing source: "Historically, Florida has lost companies because they went to venture capital firms who prefer local businesses, and most of those firms were not in Florida."
These days, startups most attractive to angels tend to be in information technology, web 2.0 and social media, life sciences, medical devices and medical-related software. Williams, of New World Angels, says the most important factor for angels is not the industry sector but the presence of smart managers with experience building a business.
Read the entire article, “Bands of Angels: Local groups of investors are forming all over Florida, providing funding to capital-starved emerging companies” (10.1.10) by Cindy Krischer Goodman at Florida Trend online http://www.floridatrend.com/article.asp?aID=53691&parentID=53781
What was not provided in this entry was information about the long-term success of the businesses that were funded. If many of the new businesses eventually failed, then the process is similar to house-flipping. Gee, hasn’t house-flipping worked out well? Some of the examples in this entry did employ a strategic approach to funding. The startups were vetted and targeted emerging business/industry sectors. If executed in a strategic and thoughtful fashion, startup company funding would be a valuable addition to a regional economic development plan.
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