Montana is a great state for fly fishing but has been a hard place to
raise capital for startups. It's a rural state, but a "unique rural"
that attracts newcomers to the high amenity natural environment including
Glacier National Park, Big Mountain Ski Resort, Flathead Lake and Bob Marshall
Wilderness. It also has a great cyber environment, boasting a 99% DSL availability.
Montana is banking on both these environments to help build its knowledge-based
economy, since both are strong magnets for "angel" investors and
those entrepreneurs who want to work where they choose to live.
In Whitefish, Montana West Economic Development* (MWED) has "kicked
it up a notch" by helping local angels form an organized group and
begin setting up an investment fund. Nothing attracts capital and entrepreneurs
like an active local angel group.
We began serious consideration of forming an angel group after attending
the 2002 Annual Conference of the National Association of Seed and Venture
Funds (NASVF) in Pittsburgh. Later in October 2003, we brought NASVF staff
to Whitefish to hold "Seed Investing as a Team Sport", their highly
successful networking workshop for local angel investors and seed investing
professionals.
We knew that making the event a success meant getting the right people
in the room. We made one-on-one calls and brought home the key point: it's
all about the network of people and remains all about the people.
Recruiting could have been a challenge in Whitefish, a city of 5,000 located
in Flathead County where the total population is about 81,000. But the
event drew about 60 attendees, each bringing to the table a unique portfolio
of investments, skills, experiences, networks and personality. We achieved
the critical first step in introducing the concept of forming an angel group
in Northwest Montana.
We next began building the information base about the angel investing
process and the people who would be involved. After some legwork and phone
calls we created an Accredited Investors database and then, in August 2004,
held our first gathering. We met in an antique warehouse, shared good food
and wine and started to get to know one another, talking about what we hoped
to accomplish and why we were interested. Everyone received a copy of An
Executive Briefing on Cutting-Edge Practices in American Angel Investing (The Darden School, Batten Institute, University of Virginia). Things started
coming together when the group unanimously adopted the name "ACME Angels
of Montana."
The group met again in September and as expected, there were new faces
at the table. But we were well on our way in building a core group of 12-15
that would make the group sustainable. After tackling issues like where
deals would come from, whether to invest in particular sectors, possible
investing outside the area, and whether to invest as individuals or as a
group, ACME's members dived right in and had companies present in October,
November, December and January, 2005. These meetings made it clear that
ACME had to structure itself better to research mountains of information
needed on companies at various stages of development and to improve information
on valuation and sales.
Now ACME is in the first stage of formalizing a small, early stage fund.
The draft fund private placement memorandum (PPM) shows offers of units
in small amounts. The formal group will be member managed. Members have
already elected a group Chairman and Treasurer and have formed a due diligence
committee to look at opportunities. An early decision is that companies
will not come before the group without a negotiated term sheet. Voting
can be made in person or by proxy, and will be up or down with a simple
majority making the decision. The details are still being hammered out
but the outlook is very good.
ACME members are building a databank of resources for due diligence and
considering ways to finance due diligence and how to support companies.
They are also considering how to connect with other area and regional groups
to share deal flow, information and due diligence.
Montana West Economic Development is playing a critical role for the
group as facilitator, providing ACME with management and communication support.
As the word gets out the companies are coming with deals, but the group
has very realistic expectations about the number of investments they will
make. ACME members are in it for the long haul, expecting to gain a financial
return but with the shared value of "doing good" for the area
economy. Each angel investor wants to support innovation and opportunity,
are making investing their vehicle to do it. Just out of the starting gate
ACME is already evolving and the members are having fun at their work.
For more information on MWED (Formerly Jobs Now, Inc.) and Flathead County,
see http://www.dobusinessinmontana.com
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