Until recently, the Impact Angel Group has operated as a loose consortium of angels that came together on a deal-by-deal basis, but the problem was…..
It’s really hard to be individual impact investors in Colorado. Because the companies we see are in so many different industries, they require a lot of different expertise to vet. Many of the companies need a fair amount of support to become “investor ready” and it takes an angel investor village to be able to vet and support these opportunities. Unfortunately, there are very few active angel investors in Colorado and few accredited investors have the time or desire to really dig into these opportunities – especially on a volunteer basis.
To address this challenge, we’re building a more formal structure to encourage impact angel investing.
We are on a two year timeline to raise a 5 million dollar fund.
The Fund Focus:
The fund will invest in Colorado-based companies with the potential to make a significant financial return in order to create a positive impact on our local economy and entrepreneurial ecosystem. We will have a preference to invest in companies that will make a significant social and environmental impact, but we will not forgo our investment pacing and financial return standards to do so. A failed attempt to achieve a positive financial return on Colorado’s first impact fund could have very negative consequences, so we will weigh our impact and return goals very carefully.
Why do we want to raise a fund?
There are several reasons, but primarily, the fund will enable the Impact Angel Group to be more efficient and effective angel investors and will encourage more investors to follow suit.
What types of investors will the fund target?
The fund will have a strong value proposition for:
- Anchor Investors. The fund will target 5 – 10 anchor investors to commit $250,000 or more to the fund. Potential anchor investors include very high-net worth individuals and/or accredited investors who are uninterested or too busy to take an active role in the due diligence process or provide ongoing support to portfolio companies.
- New Angel Investors. We will accept a limited number of 25-50k commitments to encourage new angel investors to dip their toes in the water.
- Existing Active Angel Investors. We will also accept a limited number of 25-50k commitments from active angel investors to invest smaller amounts and encourage them to invest alongside the fund. With this, active investors will be able to take advantage of the funds’ deal sourcing and vetting process, but will also be able to be an active part of the process and invest in the things most interesting to them.
Who will screen the investment opportunities?
Elizabeth Kraus, the Impact Angel Group Managing Director and Deal Flow Manager, Sheila Lamont, will source and screen potential investments before presenting the opportunities to the fund’s investment committee.
How will investment decisions be made?
Pre-screened investment opportunities will be presented to an investment committee made up of seasoned investors and industry experts. Investments decisions will be made by majority vote of Sheila Lamont and Elizabeth Kraus, and the investment committee. Because the makeup of this committee is critically important to the success the fund, we are going to work closely with our committee candidates on a few individual investments before finalizing the structure and makeup of the investment committee.
When is the expected close of the fund?
We expect to close the fund on or before 8/1/2015. We have given ourselves a two year window for this process in order to enhance our own investing skills, recruit an effective investment committee and implement the investment structure above.
How did we choose the size of the fund?
We are designing this fund to invest only in Colorado-based companies and from our experience reviewing more than 700 Colorado-based angel investment opportunities over the past two years and investing in 13 Colorado-based companies, we feel an investment pace of roughly $1 million per year for five years is the best recipe for success. We feel a larger fund will put us at risk for outpacing our operational capacity and force us to invest in sub-optimal opportunities.
What progress have we made thus far?
We are soft circling fund investment interest and actively recruiting investment committee members. Since our launch of this process on 8/1/2013, we have soft circled $400k and secured interest from highly qualified investment committee members including serial entrepreneurs, former fund managers, and successful entrepreneurs in the industries in which we plan to invest.
Will the Managing Director have skin in the game?
Yes, the managing director has already committed $250k to the fund.
How will the Impact Angel Group operate until we raise this fund?
We are going to continue to invest on our own dime to continue to build our network and improve our investing skills. Additionally, until the fund is raised, we will operate as a membership organization to allow investors to take advantage of the one to two investment opportunities we’re seeing each day and the network of angel investors with whom we’ve built relationships. For more details or to become a member, click here.
For additional information or to be considered as an investment committee member, please contact us.