Tim Engstrom, 12:24 a.m. EDT April 20, 2014
A group of Southwest Florida angels is again searching for innovative entrepreneurs who need a key investment and some sage advice to turn good ideas into a growing business.
The Naples-based Tamiami Angel Fund II is taking on investor members to fund up to $6 million in startup capital. The fund was created by members of the first Tamiami Angel Fund, which began in 2010 and distributed more than $2 million through last year to startups, including:
• MassiveU: a Naples-based provider of mobile applications used to deliver learning content through smartphones, tablets or other online devices.
• Wasabi Modern Japanese Cuisine: a mall-based restaurant concept featuring sushi served on a conveyor belt
• Fracture: A company with technology to print photos directly onto glass
The companies are in varying early stages of establishing their markets, fund chairman Timothy J. Cartwright said.
“We haven’t had any failures, but the bad news is we haven’t had any exits yet,” Cartwright said. Companies that exit the startup phase ideally are acquired or, more rarely, go public through an initial public offering, providing a return on the angel investment. “We are still in the monitoring and mentoring stage with those companies.”
He said angel investors are essential to startups because banks avoid the risk and venture capitalists invest in more established companies.
With the first fund distributed, members were ready to launch a second fund, Cartwright said. Like the first fund, the Tamiami II will be administered by a third-party organization, Peninsula Fund Administrators, and investing members will meet at least monthly to conduct the democratic process of vetting proposals to find those worth investing in.
Members join by invitation, but the fund is looking for additional investors, who must have a net worth of $1 million or $200,000 in annual income. This is not an investment scenario for someone looking to ensure steady income throughout retirement, Cartwright said.
“People think of this kind of investing as one out of 10 investing, because that is really what the outlook is,” he said. “It’s that one big success you find that covers the other nine.”
But that is not to say the fund members or managers take risk lightly. During the investment phase of the first fund, Cartwright said the group received information from 838 companies, saw presentations from just 46, conducted due diligence on 21 and eventually invested in just six.
This month, the Tamiami Angel Fund II invested $500,000 in Senzari, a music data company that analyzes what a customer is listening to and makes appropriate recommendations.
Additional presentations are being scheduled.
The goal is to progress from presentation to funding in about 90 days.
“Our whole focus is to try to get to ‘no’ as quickly as possible and if we can’t find a reason to say no, we look to invest,” Cartwright said.
Angelo Biasi, founder and CEO of MassiveU, said angel investors are essential for startup companies to get to market without getting beat by competitors. The first Tamiami Angel Fund invested $380,000 in the company, which was founded in January 2013.
“We are early to the party, but the room is filling quickly,” Biasi said. “The capital allowed us to invest in our product development and build out our team. Without it, we would have had to move much slower and risked losing our competitive edge.”
Fund board member Joe Trachtenberg said investigating companies for potential investment is a rewarding part of being an angel investor.
“These are business people who were involved every day in the operations of their businesses and many were involved in acquisitions almost daily,” said Trachtenberg, a former CEO of Victaulic Co., a Pennsylvania pipe and fittings manufacturer. “It’s amazing the breadth of knowledge you can find in one group of people.”
Some fund members have taken positions on the startup company’s boards to provide further guidance.
Cartwright said they are there to share their expertise, not micromanage.
“Angel investors don’t want to be in charge,” he said. “We want great entrepreneurs with great knowledge in their markets.”
For more information on the Tamiami Angel Funds, log on to tamiamiangels.com or contact Daphne Barley at 262-6300 or firstname.lastname@example.org