By Tom Ballard, Chief Alliance Officer, PYA
It’s been a great 18 months for Knoxville-based Angel Capital Group (ACG), and it started with a business model change made in April 2015.
“It’s working better than we had expected,” ACG Chief Executive Officer Eric Dobson says of the decision that started when he combined ACG with RAIN Source Capital, a Minnesota-based fund operator.
As reported in this teknovation.biz article from early 2015, the move combined RAIN Source Capital’s success in organizing high-performing angel funds, not just chapters, with ACG’s back office, technology-based expertise including its due diligence model called Venture 360.
Couple that action with the fact that angels are having to assume more of the load for early stage capital and ACG’s aggressive embracing of deal syndication, and you have a recipe for success.
Dobson cites these accomplishments:
- ACG made the largest investment in its history this year and more deals in Tennessee than in any prior 12-month period. They include General Graphene (largest investment in ACG’s history), Care 24-7 (second largest in history), Arkis Biosciences (third largest), Heilo, DataFlyte, AirFlare, and ReviewBox. The last two were participants in the coding cohort in the Knoxville Entrepreneur Center’s “The Works” accelerator.
- Total investments were three times the amount invested in any previous 12-monthg period.
- ACG added two new angel chapters/funds in 2016 and expects to add a number of new ones in 2017 in cities where it already has individual investors.
“The reality is that angels are having to take these deals longer,” Dobson explains, adding that this is because venture funds are delaying their initial investment in start-ups. “Early stage venture capital has all but dried-up across the industry, so angels and angel groups must plan to make more than one investment, and often a larger one, in a high-growth company so that it can reach organic growth or a venture round of capital.”
Recognizing the changing landscape helped Dobson and the ACG team modify their strategies, something that is evident in the results.
“That’s why this syndicate of angels makes so much sense,” he says. “We were really early on this syndication curve,” a fact that includes deals across the ACG network as well as with other funds. “Externally, we choose our partners carefully, starting with geography and sector.”
This collaboration strategy is one of the reasons Dobson pushed to host last month’s Angel Capital Association “2016 Angel Insights Exchange” in Nashville. “The golden rule of syndication is reciprocation,” he explains.
Earlier this year, ACG launched two new initiatives – KEC Accelerator Fund to support the coding start-ups in the Knoxville Entrepreneur Center’s “The Works” program and an EPIC Advanced Materials Fund.
ACG has three clubs in Knoxville, Nashville and Ft. Lauderdale and two city funds in Florence, AL and Ashland, KY. It will be relaunching three clubs as funds in 2017. They are in Charleston, SC, Denver, and Kansas City. In addition, ACG is exploring new funds in Boone, NC; Durango, CO; Red Wing, MN; Wilmer, MN; and Winston-Salem.