By Scott Meacham
Copyright © 2015, The Oklahoma Publishing Company
Angel investors are the very early stage individual investors that fund the majority of startups in the U.S. Nationally, they supply about 90 percent of the outside equity to these young businesses.
Angel investments continue to be a significant contributor to job growth — The Center for Venture Research (CVR) cites 264,000 new jobs in the U.S. in 2014 or 3.6 jobs per angel investment.
CVR has been conducting research on angel investing since 1980. They are the go-to source for national trends.
CVR reports that in 2014 the number of entrepreneurial ventures receiving angel funding increased nearly 4 percent year over year. The number of active angel investors reached 316,600, an increase of 5.9 percent over 2013.
But all the news isn’t good.
In aggregate, angel investors shifted the dollars they invested away from seed and startup stage investments to later stage funding. However, seed/startup stage is where entrepreneurs need capital the most.
That’s why the impact that SeedStep Angels (with 48 members in groups in Oklahoma City, Tulsa, and across the state) is having on the Oklahoma startup scene is so important.
SeedStep Angels members have invested $7,155,421 in 32 companies, almost entirely in seed stage.
These angels bring much more than money to a deal.
Most of them have experience as an entrepreneur or a company executive. The majority come from oil and gas or finance, which means they have many contacts. Several angels have experience in multiple industries. They help their portfolio companies make connections and create a viable capital plan.
Pride in local deals
It’s great to see the pride that these angels take in investing in deals that are from their communities. They are looking for returns, and they also express a sense of satisfaction from helping businesses grow in their communities and knowing they are giving something back.
Both i2E as manager of the group and the individual SeedStep Angels would like the group to be able to consider more well-vetted deals.
So SeedStep is moving from bimonthly to monthly meetings to double the opportunity to see more deal presentations. Also, syndication efforts with angel groups and venture capitalists in neighboring states is being increased. At i2E, we are stepping up our efforts to help entrepreneurs market-validate their ideas faster and earlier to help increase the pipeline of quality investment opportunities.
As SeedStep Angels continues to evolve, we are now considering organizing an investment fund to allow broader angel participation and greater diversification.
When SeedStep Angels was formed a little more than five years ago, our vision was to engage accredited investors in Oklahoma to create a continuum of capital for Oklahoma entrepreneurs.
It’s not time to declare victory, but we have sure come a long way.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at [email protected].
Did You Know? Sixty-two percent of angel groups co-invest with other groups, institutions, or venture capitalists. This leads to larger investment rounds. SOURCE: Halo Report