Angel Capital Group, RAIN Source Capital combine businesses
By Tom Ballard, Director of Innovation and Entrepreneurial Initiatives, Pershing Yoakley & Associates, P.C.
They did not know each other before meeting about a year ago, but Eric Dobson and Steve Mercil have now combined the businesses they lead with a goal of further accelerating angel capital availability across the country.
Dobson, a well-known leader in Knoxville’s entrepreneurial ecosystem, is Chief Executive Officer (CEO) of Angel Capital Group (ACG), a position he assumed in September 2013. Mercil, who has spent three decades helping secure financing for businesses, is CEO of RAIN Source Capital based in Minneapolis, MN.
The two met when Mercil came to Oak Ridge as part of an Appalachian Regional Commission initiative to help address the investment capital deficiencies in its 13-state region. His local focus was to assist Tech 2020 establish The Lighthouse Fund.
“After a year of talking, we said this is a good fit,” Mercil said. “Let’s go for it.”
The “fit” that he referenced capitalizes on RAIN Source Capital’s success in organizing high-performing angel funds and ACG’s back office, technology-based expertise including its due diligence model called Venture 360.
“Steve is undoubtedly the most prolific fund developer in the country,” Dobson said. Mercil has helped organize 30 angel funds across the country, a statistic he says exceeds anyone else.
Their combined effort will operate under the Angel Capital Group name with Dobson serving as CEO, Mercil as Chief Business Development Officer, and Scott Ewing as Chief Operating Officer. For now, Mercil will remain in Minnesota.
“We’re on a fairly aggressive growth plan,” Dobson explained, adding the goal is to double their combined footprint in 2015 and have a total of 50 funds within five years.
ACG has historically organized angel chapters, rather than creating funds. On the other hand, RAIN Source has helped create and manage a network of local, statewide, and multi-state angel funds.
Going forward, Dobson says ACG will continue to support its existing groups, but focus future efforts on establishing angel funds.
“We are looking forward to growing a national group,” Mercil explained. In less than two months of a combined effort, they are on a good trajectory. Two funds have already been started – one each in Kentucky and West Virginia.
Mercil, who founded RAIN Source Capital in 1998, has been very active on a national basis, including a term as Chair of the Association of Seed and Venture Funds and a member of the board of directors of the Angel Capital Association. He started his career in Northern Minnesota where he assisted a community business organization find equity financing to build-out an industrial park.
“The experience taught me two lessons,” Mercil said. “You have to capture ideas in your own backyard for economic development to occur, and you have to have capital to do so.”
Dobson, one of the region’s serial entrepreneurs, joined ACG in July 2012 as Chief Financial Analyst and Director of its Knoxville Chapter.
As the combined team pursues its aggressive growth plan, Mercil offers a good metaphor for the way it will work.
“I think of the local groups as the community bank and ACG as the correspondent bank,” he says. “ACG provides the services needed by the local groups to operate successfully and find like-minded co-investors for their high-quality, local opportunities.”