‘Angels’ aid young companies – Spokane has dearth of private investors

Rob Daugherty does not look like an angel.

Maybe a little angelic since he eliminated the mustache he sported as a KXLY-TV news anchor in the 1980s and 1990s. And, at age 47, more relaxed in his role as husband and father to three young children.

Bert Caldwell
The Spokesman-Review

It helps that he can sleep through the night undisturbed. "I don’t miss the 3 a.m. calls to cover a shooting on the North Side," he says.

In 1997, Daugherty set aside his job as mild-mannered reporter and anchor to become Robert L. Daugherty, private investor, what insiders call an "angel."

Angels typically help young companies that do not yet have the revenues or the balance sheet to qualify for a bank loan or other conventional financing. Angels are often the first stop for owners looking to grow their businesses and willing to sacrifice a share of the ownership in return for funding. Angels can be a critical component of the infrastructure communities need to support entrepreneurs.

So few are the angels in Spokane, they just might be able to dance on the head of the proverbial pin.

Daugherty recalls his experience rounding up financing for Translation Technologies Inc., a Spokane company that has developed software that permits the exchange of design documents generated by otherwise incompatible formats.

He estimates he tried to entice more than 100 area investors into backing TTI. Only one or two signed on.

Daugherty, a member of the Alliance of Angels http://www.allianceofangels.com/abo.asp in Seattle, raised more money in two hours from a roomful of investors in that city, he says.

"There aren’t a lot of people like me around here," he says, including the Delta Angel Group http://www.deltaangelgroup.org/ of Post Falls, ID in that fold.

Some of the West Side backers wanted to move TTI. "We said no," says Daugherty, who has a seat on the company’s board of directors.

Daugherty says he got his start in Rockford, Ill., in the early 1980s. A friend with an automobile lubrication business needed money to start franchising. With the help of money from Daugherty, Lube-Pro’s expanded from three stores to almost 100 by the time — 1994 — he sold his interest.

"I thought it was going to be the next McDonald’s," he recalls. "I kind of got hooked on it."

By then, Daugherty was at KXLY. He loved the job, he says, but by the mid-1990s was earning more as a part-time investor than he was as a full-time journalist.

"We had some phenomenal years, as most people did," Daugherty says.

He was, for example, one of the early investors in Packet Engines, the Bernard Daines telecommunications company purchased by Alcatel in 1998 for $315 million. He rolled some of his profits into Worldwide Packets, another Daines effort that has struggled with the telecom collapse.

Daugherty says he has invested in four Spokane companies, as well as six others in Seattle, California’s Silicon Valley, and Huntsville, Ala., a connection he made through a Seattle venture capital group.

He is a limited partner in some venture capital funds, and also has acquired a portfolio of Spokane commercial properties.

He declines to talk in specifics about his investments and returns, but notes he usually ventures about $100,000. Right now, he is focusing on current holdings that have weathered the last few lean years.

He’s had some losses, but nothing so disastrous or discouraging that he had second thoughts about giving up his night job.

"That’s part of the game," Daugherty says. "You have to write that into the model."

The kick comes in finding new ideas and working with those who can build them into a dynamic business.

The excitement is all the greater if he finds them locally.

"There are good companies in Spokane," Daugherty says. Maybe not potential behemoths like Microsoft, but prospects that can do well with annual sales of $20 million to $30 million.

With inadequate investment resources of its own, he says, Spokane must find ways to connect with Seattle’s angels.

"We have to build a bridge," says Daugherty, repeating a concern often voiced in the Inland Northwest.

"We could have ideas here and it would fail for lack of financing."

http://www.spokesmanreview.com/news-story.asp?date=081203&ID=s1394020&cat=section.business