Angels Give BioMed Firm A Lift
As its founder Chuck Stoddard puts it, “We’ve got 38 investors. That’s up from zero a year ago. That’s not bad. And we want to double that number by next year.”
Second, the group recently hired an experienced business lawyer, Jody De Pree Vanderwel, as its president to run day-to-day operations and to help recruit new investors.
Third, Grand Angels just announced joining in a health-science investment which — to put it in laymen’s terms — could involve development of a silver bullet for prostate cancer and some forms of lymphoma.
That type of health implication also means the investment could raise a nationally visible banner over
Vanderwel, along with Stoddard, who continues on as board chairman, announced the investment in an anniversary interview with the Business Journal last week.
They said members of the local investor network recently joined with other investors and local venture capital groups in a development-stage firm known as ProNAi Therapeutics Inc.
They identified the firm — based in
ProNAi reportedly intends to use its technology initially to combat prostate cancer and non-Hodgkin’s lymphoma (NHL). It plans to start human clinical trials as early as next year.
Vanderwel said Grand Angels is “thrilled to be partnering not only with such a talented group of scientists, but with our investment colleagues just down the road in
Involvement in ProNAi is somewhat more ambitious than a traditional angel project in that it also involves venture capital groups, the Apjohn Group and the Apjohn Ventures Fund.
Ordinarily, Stodddard said, angel investors work with firms in what he called the “seed stage,” involving a concept or product that hasn’t been commercially proved.
Angel investments, he said, range from $250,000 to $3 million.
“We fall between the ‘3F’ level of financing — family, friends and fools — and venture capitalists. Venture capitalists generally are interested in firms that are beginning to show a profit and think in terms of investing several million dollars.
“We try to bring companies up to the venture level. Our type of investing has a lot more risk than venture capital investing.”
He said the angels’ purpose is to help firms that are producing revenue but so far aren’t profitable and, therefore, don’t qualify for commercial loans. He said angel investors also mentor the firms they are helping.
Yet Stoddard indicated the ProNAi project — though more expansive than traditional angel investing — is quite consistent with Grand Angels’ overarching threefold mission:
- To make profitable investments in
- To give back to the community on the assumption that the new companies will create jobs.
- To have fun, given the camaraderie among the angel members.
The investment is the third in which one or more members of the Grand Angels have become involved since the group’s creation.
And it’s not likely to be the last.
One of Vanderwel’s jobs is to administer a bi-monthly schedule of preliminary reviews with entrepreneurs who seek angel seed money. Those reviews can lead to screening meetings, full presentations and then follow-up meetings with angels.
And as she and Stoddard both pointed out, many people who contemplate making a pitch to the angels often aren’t well prepared for it.
Accordingly, part of Vanderwel’s job in meeting with entrepreneurs is often to send them off to get themselves properly grounded through meetings with SCORE, the Michigan Small Business and
“When I set out to start Grand Bank,” Stoddard said, “my investors told me I needed to prepare a business plan. So I went to the library and got a book on it. Nowadays, we have a great many more resources available to people.”
His description indicated that making a full presentation to the angels might make an “American Idol” performance look like a cakewalk.
“When you consider that 90 percent of new businesses never see their fifth anniversary,” Stoddard said, “you can see that this kind of investing is pretty risky, and so the investors are certain to be pretty skeptical.”
He said the applicant has 15 minutes to make a PowerPoint presentation that will convince one or more angels to risk their personal funds on a venture.
It’s not an easy sell, he said, not only because angels are averse to throwing away their money, but also because “they’ve been there, done that.”
He said the angels invest in firms with the following qualifications:
- Strong management
- Strong market
- A proven revenue model that is scalable
- Strategic alliances
- Sustainable competitive advantage
- Cash flow
- Sales and marketing strategy
- Exit strategy.
Stoddard said angel groups are generally comprised of “cashed out” entrepreneurs and other high net worth individuals.
“Their motivation is not just to make money,” he said, “but also to spend time with early-stage companies. Angels realize that the role of mentoring, coaching or simply making introductions to the right people can be just as important to the success of a new company as the money invested.
“It also gives the individual angel an opportunity to stay engaged in business by sharing his or her skills and experiences.”