By Tom Ballard, Chief Alliance Officer, PYA
RAIN Source Capital Inc., the not-for-profit partner of Knoxville-based Angel Capital Group (ACG), has been awarded a $499,480 grant under the federally-funded Partnerships for Opportunity and Workforce and Economic Revitalization, or POWER program.
The award, announced in late 2016, was one of 42 made under the initiative to assist communities negatively impacted by changes in the coal industry and power sector. The combined awards, totaling $28 million, come from either the Appalachian Regional Commission (ARC) or the U.S. Department of Commerce’s Economic Development Administration (EDA).
In ACG’s case, the funding was awarded by ARC.
“The Commission liked what ACG and RAIN Source were doing to help angel investors organize,” Eric Dobson, ACG Chief Executive Officer, said. “We will take that proven approach and create angel funds throughout the region to spur economic development in coal-impacted communities.”
Dobson noted that Steve Mercil, Founder of RAIN Source, has been working with ARC on “one-off” projects for several years. His organization combined with ACG about the same time he started working with ARC as noted in this teknovation.biz article from early 2015.
“ARC has given us a two-year grant to create a more coherent program,” Dobson explained. “This is a big deal for us, and we are thrilled to be working with the ARC.”
The announcement describes the ACG project as creating the “Appalachia Angel Investor Network” with a focus on nine of ARC’s 13 states adversely impacted by the decline in the coal industry. The stated goal is to create at least four new angel funds in target communities and provide tools, training, and support services to existing angel funds and networks already operating in Appalachia.
ARC says the project will result in the creation of 20 new businesses and 100 new jobs, and will leverage $4,000,000 in private investment from 100 investors. Dobson believes those numbers are for the short-term.
“ACG and RAIN Source combined have invested $46 million in 140 companies, creating 4,500 jobs and securing $900 million in follow-on capital,” he says. “Now, we are focused on doing the same for the Appalachian region.”
In essence, ARC is leveraging the existing expertise of ACG, particularly its work and relationships in the Mississippi River Valley (from Minnesota to Louisiana) and in the Appalachian region (as far north as Western New York and as far south as Alabama and Mississippi).
“ACG recognized that we were sharing industry best practices and some of our own particular methods for researching investments with angels that were eager to become more professional in the way they approached investing in start-up and early stage companies,” ACG’s Scott Ewing said, explaining that “professional” means aspiring to excellence in all aspects of investment.
“We believe that successful angel investors in a specific place cause others in that locale to become encouraged toward entrepreneurial business,” he added. “Our hope is that success will breed further success in places that, until recently, have not been known for technology-based or tech-enabled entrepreneurship.”
In addition to educating would-be angels on how angel and venture investing works and assisting in the organizing of new funds, ACG will also mentor angels on a variety of topics including fund strategy, due diligence, marketing and outreach, and syndication.
“The last item is particularly important, as one of the factors limiting entrepreneurial activity throughout the region has been a scarcity of investors that specialize in early-stage technology deals,” Ewing explained.
ACG has been on a roll as noted in this recent article in teknovation.biz that summarized its highly successful 2016.