Portland Angel Network Seeks New Spark As Economy Rebounds

Portland’s angel investors haven’t exactly disappeared. They’re simply resting their wings.

As such, the investors could resume their seeding activity upon the Sept. 28 restoration of the Portland Angel Network. The group returns after a six-month hiatus linked mainly to Oregon’s stagnant economy.

By:
Andy Giegerich
The Business Journal of Portland

http://www.nasvf.org/web/allpress.nsf/pages/9522

The organization will become less of a social network and will now focus more on education programs designed to help investors make wise spending decisions.

The local angels’ return suggests that all investment forms, ranging from the bigger-bucks venture capitalism to the smaller-bequeathing angels, could rebound.

"We’ve been in somewhat of a drought for the last couple of years, but people are more engaged now," said Sidney Joyner, who heads the Oregon Entrepreneurs Forum’s Women’s Investment Network, an angel-investment seeking group. "And certainly among the WIN group, there’s a lot more interest and opportunities to get involved."

The emergence of the WIN group hints at another possible trend: As angel investors reappear on Oregon’s financial environs, their makeup may differ from angels of the past.

"It’s not new that women are investing in early-stage companies, but I think it was more subterranean," said Joyner, whose company, The Joyner Group, performs organizational development tasks.

"There have been women angels, but it wasn’t that obvious. I don’t have any statistics, but I don’t think there were as many women doing it as there were men. What WIN has done has shined more light on it."

An increase in angel investing

Angel investing refers to individuals who fork over at least $25,000 to early-stage companies or entrepreneurs needing seed money.

The Portland Angel Network restricts its membership to individuals who’ve received Securities and Exchange Commission investing accreditation. To do so, either the angel’s net worth must exceed $1 million or he or she must earn more than $200,000 annually, or $300,000 in combination with his or her spouse.

The Portland group further requires its members to either have made investments in the past year or plan to do so in the next six months.

While no local figures are available, the Center for Venture Research at the University of New Hampshire said national angel investments rose from $15.7 billion in 2002 to $18.1 billion in 2003. The center estimates that the United States accommodates between 250,000 and 400,000 active angel investors.

Angel investing levels are also closely tied to the amount of venture capital expenditures, said Kathryn Shimabukuro, a KPMG LLP Portland director and chairwoman of the Portland Angel Network.

During 2004’s second quarter, the Northwest region saw 44 venture capital deals swung worth $325.8 million, according to accounting firm PricewaterhouseCoopers. The number improves on the $95 million invested during the same period in 2003 and on the $236 million invested during 2004’s first quarter, the firm said.

In Oregon, the numbers have risen dramatically: Venture capitalists forked over $73 million last quarter, an increase from $26 million in 2003’s second quarter and $17 million in 2004’s first quarter.

Marianne Hudson, executive director of the Kansas City, Mo.-based Angel Capital Association, also pointed to the increased development of angel investing groups. Some 200 now exist, or three times as many that existed five years ago, she said.

"And also, we’re getting calls from areas like Portland that have groups getting started again," she said. "We’ve seen four or five of those in the last month."

The Portland Angel Network, which operates under the auspices of the Oregon Entrepreneurs Forum, provides members with bimonthly presentations from up to four promising companies seeking early-stage funding.

Investors — as many as 40 are expected to attend the meetings — generally gauge whether the companies exhibit solid growth and profit potential.

Companies making presentations typically seek between $500,000 and $2 million, Shimabukuro said. Companies funded through angel monies include Origin, a Portland-based Web-enabled medical supply company that received such funds in the last year.

Before going on hiatus, PAN, formed in 1998, counted 180 members.

"It was created as more of a network for angels, and it became more of a social event than a group for serious angel investors," Shimabukuro conceded. "And as times changed, with the downfall of the market, angels began looking for something different."

Such new offerings include educational tracts that occur prior to the new company presentations. The hour-long programs, aimed solely at investors, simply focus on making smart decisions and gauging a new company’s potential, said Shimabukuro.

The educational programs will also host industry analysts who discuss cutting-edge industries, such as nanotechnology and the open source software development movement.

Shimabukuro said the group wants to attract a wide range of early-stage companies.

"Before, we had primarily technology companies because that’s what Oregon has to offer," she said. "But the angels told us they want more traditional companies represented, be it consumer or manufacturing companies."

At least 40 early-stage companies have applied to make presentations since word leaked about PAN’s return, Shimabukuro said.

Linda Weston, executive director of the Oregon Entrepreneurs Forum, said she expects the network to flourish once Oregon’s economy improves.

"A lot of the angels are just not as liquid as they were a few years ago," she said. "There aren’t as many people writing checks.

"The good news is that it appears things are beginning to loosen up, and the angels are beginning to write checks again."