Friday, February 3, 2012

New angel fund launches in Triangle, raises $2.3 million

From Triangle Angel Partners website and WRAL Tech Wire

Startups in the Research Triangle now have an additional source of funding. Triangle Angel Partners, formed by more than 40 individuals from the area, has raised $2.3 million for investment in the Triangle.

Backers include Rich Lee, the former owner of Hosted Solutions which he sold to national telecommunications provider Windstream Communications.Craig Stone, an entrepreneur himself who has built HireNetworks into one of the area’s most successful employment services firm, is also among the founders.

Merrill Mason, a partner at the Smith Anderson Law Firm, and Rich Harris, managing director of Synergy Commercial Advisors, also helped launch the new fund.

Startup capital is one of the most difficult sources of funding for new companies in the Triangle to attract. Angel investments often help new companies grow to the point that they have products and revenues, two factors crucial in attracting institutional capital from venture capital firms. Early-stage funds in the Triangle include NC IDEA Fund Partners and Southern Capitol Ventures. Intersouth Partners, the southeast’s largest venture firm, also will make early-stage deals.

The angels in TAP includes a mix of high net worth individuals, some of whom are entrepreneurs and experienced investors themselves.

“This group was formed to leverage our networks and gain access to the vast amount of deal flow in this area,” Stone said in a statement. “We are all passionate about entrepreneurship and look forward to helping our companies succeed.”

TAP investors also plan to be actively involved in startups from roles on boards to serving as advisors while also providing links to venture firms and other angel networks.
Eric John serves as the fund’s manager.

TAP plans to have meetings on a monthly basis where startups will be interviewed for potential investment. Companies first have to be screened through a selection process set up by TAP.

Investment Criteria
The fund’s investment criteria as spelled out on its website:

Management Team
We look for teams of high-quality entrepreneurs with a track record of leadership and performance, either in the company’s specific industry or in prior entrepreneurial ventures. We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. As we will be working together as partners, your team’s credibility is essential. In addition, your team must be open to and comfortable with receiving input provided by angel investors.

Market Opportunity
Your company must demonstrate a strategy to claim significant share of the target market. There are plenty of great business ideas, but not all businesses will generate returns that justify angel investor and venture capital financing. Therefore, providing a solution to a problem with a large potential market is essential.

Use of Proceeds
Funds must be used to accelerate your company’s achievement of key milestones that increase the company’s value. We generally fund activities that include research and product development, building a sales and marketing infrastructure and hiring key executives.

Growth Potential
We look for companies that can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea. Do you have a strategy to achieve multiple sources of revenue? We also require well-conceived financial projections, based on sound assumptions, demonstrating consistent profits and cash flow growth.

Competitive Advantage
Your company must have some proprietary features that distinguish you from potential competitors or provide barriers to entry that prevent other companies from capturing your customers with a similar offering. Attributes that convey competitive advantage include intellectual property protection, exclusive licenses, exclusive marketing and distribution relationships, strong brands, scarce human resources (i.e. knowledge and skills), and access to scarce raw materials.

TAP members have significant executive experience in a variety of fields. One of the benefits of working with angel investors is the active coaching and contact network that such investors can provide. As such, there must be a fit between members of our group and your idea.

We prefer to invest in first-of-a-kind new ideas, rather than incremental enhancements to existing products and services. However, we approach highly complex, esoteric technologies with caution. The concept behind the technology must be proven and verifiable. Further, we avoid science projects that don’t demonstrate a clear path to commercialization. Any breakthrough innovation must be accompanied by a strong business plan.