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Growing Wings: Building a Northwest Montana Angel Group
Liz Marchi Liz Marchi
Montana West Economic Development

Kalispell, MT

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

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