Investors Form A Band Of Angels

June 11, 2004
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GRAND RAPIDS — West Michigan probably always has had more than its share of angel investors: successful entrepreneurs willing to give other entrepreneurs a financial start.

In one such case years ago, a group of community leaders helped Charles D. Stoddard find the investors to help him establish and open a new firm called Grand Bank.

That’s one reason that, starting late last year, Stoddard — former chairman of Grand Bank Financial Corp. — proposed that several local investors flock together and incorporate formally as the Grand Angels Inc.

It’s an entity that — according to its Web site — is committed to strengthening the West Michigan business climate through investments in local entrepreneurs. According to Stoddard, angel groups try to find investments that — if successful — produce jobs, revenues and economic growth.

Grand Angels is headquartered at the Riverview Center, 678 Front St.

So far none of the investors has underwritten any new enterprises, but Grand Angels is in the final or due diligence phase of such arrangements with an unstated number of entrepreneurs.

Unlike a venture capital organization, Grand Angels does not invest corporately. Instead, its members invest personally.

Moreover, unlike venture capitalists, angels seek neither majority ownership nor management authority, but exercise a mentoring role with the entrepreneurs whom they help finance.

The organization advises that along with engaged and sound advice, its members can invest from $100,000 to $2 million as equity or convertible debt.

Stoddard’s Grand Angels co-founders are:

  • Jim Brooks, managing partner of Alpha Genesis LLC and chair of the West Michigan Strategic Alliance

  • Patrick Gaughan, managing director of Alpha Genesis

  • David Hathaway, attorney with Miller, Canfield, Paddock & Stone, and retired president of Precious Moments Family of Companies Inc.

  • Craig Hall, Grand Angels founding director, founder of the TLC Group of Total Logistics Control, and founder and chair of LeanLogistics Inc.

  • Jim Heynen, president of The Greystone Group Inc.

  • Mike Jandernoa, former president and current chairman of Perrigo Co.

  • Fred Keller, chairman and CEO of Cascade Engineering.

Stoddard says the angel investors took the step because “Grand Rapids has a history of generous giving.”

“We want to help entrepreneurs and play a role in building a new generation of successful, philanthropic, community-minded CEOs,” he added. “This is one way that we can contribute our time and financial resources back to our community which has blessed us.”

As managing director of the Grand Angels, Stoddard recruited his co-founders. The organization now has 30 members and is seeking more. In fact, Hall is chairman of new membership.

“We want to help break down the barriers to success and to bring jobs to West Michigan,” Hall said.

The Grand Angels describes itself as the only regional investment group that offers mentoring paired with what it terms to be a relatively patient exit strategy — meaning invested funds may not need to be returned as quickly as would be expected by commercial or other investors.

While Grand Angels’ investments are not geographically limited, the entity’s major focus is Kent, Ottawa and Muskegon counties.

The organization says typical members are people who have succeeded in their own ventures and have the time, finances and experience and networking contacts to offer entrepreneurs.

Too, members must quality as “accredited investors,” as defined under Rule 501 of Securities and Exchange Commission. That is, they must be people with net worth exceeding $1 million, or recent and future income above either $200,000, or $300,000 if married.

To apply for assistance, any entrepreneur may contact the organization’s Web site, www.grandangels.org

At that point, he or she will discover that it’s an eight-phase process involving interviews, screening and an illustrated presentation to the full group. If the applicant makes that cut, he then goes into what the organization calls a highly detailed meeting with any interested investors.

One angel may then take the entrepreneur under his wing through further meetings and into due diligence and final negotiations.

According to Grand Angels, more than 400,000 such investors currently are active nationwide.

The Grand Angels are members of the Angel Capital Alliance, an organization nurtured by the Ewing Marion Kauffman Foundation in Kansas City, which provides national leadership for the movement.   

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