Interest appears promising for an effort to amass investors seeking to fund high-growth start-ups in the capital region.
On Friday, a membership launch for Tallahassee’s new chapter of the Florida Angel Nexus attracted roughly 60 attendees, a mix of potential investors and professionals aware of financing challenges facing early stage start-ups.
Jason Stamm, an entrepreneur and founding chapter member, said about 20 people showed serious interest. By Monday, he’d already had several meetings with residents wanting to be angel investors. Such investors typically invest smaller amounts of their own money into high-growth businesses while venture capitalists are fund managers investing other people’s money.
“I think we are going to get an immediate 10 members out of that effort,” said Stamm, who’s invested in or advised more than a dozen local businesses and is partner at Go Beyond MCH, a Tallahassee IT company that serves public health organizations.
The ultimate goal — at least 40 members — could generate between $200,000 to $500,000 for group investments. The nexus, which screens and vets applicants, also provides an opportunity for individual investments. Stamm said individual investments will vary but the average may be $20,000.
The network has chapters in Orlando and soon in Jacksonville, and it targets technology and manufacturing companies. The Securities and Exchange Commission requires all members to be accredited and meet standards, including income and net worth.
While Tallahassee is generating statewide nods as a prime location to start a business, financing for high-risk companies has stalled local growth.
“What’s been missing is the visibility and access to capital,” said Matt Johnson, an entrepreneur and founding chapter member. “It’s not that it’s lacking entirely. There are many people in this community who fund companies and do a good job at it.… But you don’t always know who to contact to get access to those people.”
Johnson said angel investors are vital players in the start-up ecosystem since traditional lenders don’t usually take on high-risk investments. The local chapter, he and Stamm said, will bridge the gap between residents with ideas and investors with cash.
The Small Business Administration reports about half of all new establishments survive five years or more and about one-third survive 10 years or more. An SBA report said, “As one would expect, the probability of survival increases with a firm’s age. Survival rates have changed little over time.”
Johnson added the chapter’s new found presence signals investors believe there’s enough high-quality opportunities to fund companies.
“And nothing moves things forward like capital,” he said. “You have to have these things to propel your business. If you can’t fund it yourself, and the bank can’t fund and you don’t have a rich uncle, then perhaps the next best thing is an angel investor or angel network.”