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Muskegon Angels takes flight to help startups
New investors group has office for lakeshore entrepreneurs.
The Muskegon Angels was introduced at Grand Valley State University’s Michigan Alternative and Renewable Energy Center on Muskegon Lake, which is where its operations will be based.
At a news conference this month, Larry Hines of the Hines Corp. said Muskegon Angels plans to invest $2.7 million to $3 million over the next five years, although, he said, “it could go beyond that, depending on how successful we are in investing the funds.”
Muskegon Angels members also will serve as mentors to the entrepreneurs they hope to help.
Potential businesses already being vetted for financing include those related to advanced manufacturing, technology, food processing and water-related innovations and businesses.
Muskegon “is a hot bed of advanced manufacturing,” noted Mike Olthoff, who helped launch Muskegon Angels with Hines, and he added that water-related innovations also are of interest because of GVSU’s Annis Water Resources Institute, located in Muskegon. “There is a lot of research done there and some interesting things are coming out of it,” he said.
Olthoff added, however, that Muskegon Angels investments won’t necessarily be limited to the four categories cited above.
Olthoff, owner of Nichols, a paper and maintenance supply company in Norton Shores, and Hines began discussing formation of an angel investors group in the Muskegon area about a year ago. After careful consideration, the two began talking to potential investors in the spring of 2012.
Olthoff said capital for new ventures isn’t really hard to come by in Muskegon, noting that there are other angel investor groups active in West Michigan.
“The money is there. The problem is, who do you ask?” said Olthoff. “If you’re an entrepreneur looking for money, what door do you knock on? What we wanted to do was have a place for people to go, and that’s why we formed the Muskegon Angels.”
The involvement of GVSU also is a plus, he said, noting that Eric Seifert “is our man on the street, so to speak, and he has a long history of working with startups and entrepreneurs to get investment capital for them. So he understands the process.”
Seifert is a finance specialist at the Michigan Small Business & Technology Development Center at MAREC. Entrepreneurs and companies interested in presenting a proposal should contact him at (616) 331-6906.
Olthoff said he understands Muskegon Angels is a little different than most angel groups because it asked each of its investor members to make an actual cash commitment up front: $25,000 each year for five years.
“It’s not for the faint of heart,” quipped Olthoff.
When he and Hines began the conversation a year ago, Olthoff said their goal was to get 10 investors involved. “We reached that, and then we said, ‘Boy, if we could get 20, that would be wonderful.’ Well, we’re at 22,” he said.
They have stopped seeking additional investors “because we didn’t want to get too big, initially. We have money in the bank, right now,” said Olthoff.
He said Muskegon Angels also may be different from other angel investment groups because new prospects and proposals are reviewed by a conventional angel group and then the members individually decide which one to invest in.
“With this, it’s going to be a group decision. We will vote on it, and the money will either be invested or not,” said Olthoff.
Although most of the investors are from the Muskegon area, some are from outside Muskegon County.
Hines and Olthoff received help from John Pridnia of the Rehmann accounting firm and Paul Jackson of Warner Norcross & Judd law firm, as well as Seifert, in launching Muskegon Angels. Technical assistance will be provided by Kevin McCurren, director of the Center for Entrepreneurship and Innovation at GVSU, with coordination provided by the MAREC-based MI-SBTDC.
According to the Michigan Capital Venture Association, in 2011 (the last year for which data is available), there were 27 private venture capital firms active in Michigan, 20 of which are headquartered in the state. The 20 represent only 2 percent of the total number of venture capital firms in the nation, and the average venture capital under management by those firms is only one-third the national average. Michigan ranked 25th among the states for the amount invested by venture capital firms.