Banking & Finance, Economic Development, and Small Business & Startups

Investment group bumps up dollars and deals

Grand Angels positions itself for even more growth this year.

February 5, 2016
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Grand Angels is taking flight.

The Holland-based angel investment organization announced last week that, during 2015, the group not only deployed nearly $3.75 million through 12 investment deals, which surpasses previous records for both investments and activity, but also launched a second fund known as G.A. Venture Fund.

The announcement was made ahead of its official 2015 annual report, which is expected to be released in March.

With the $3.75 million deployment in 2015, Grand Angels has invested nearly $19.6 million in emerging Michigan-based companies since its inception in 2004. Its total investment portfolio has increased by nearly 20 percent, from $16.2 million in 2014 to the $19.6 million in 2015.

Grand Angels also anticipates it will surpass $20 million in investment during the first quarter of 2016.

Jody Vanderwel, president of Grand Angels, said in order for the state of Michigan to continue to grow and flourish, it is important to invest in entrepreneurial activity.

“This is where the new ideas, new jobs are going to come from, and there are always going to be jobs that kind of fall off the opportunity list. Nobody trains to be a telephone operator anymore,” said Vanderwel.

“Michigan needs to be a state that is creating the new jobs where people want to be — both entrepreneurs who have ideas, and people who are talented and interested in working in new kinds of industries, new kinds of companies.”

Grand Angels invests in emerging companies throughout the state and strives to use financial, intellectual and social capital to develop a strong entrepreneurial ecosystem supporting the economic development of West Michigan. The group not only provides a typical investment of $250,000 to $1 million in early-stage companies, but also offers mentoring, strategic advice, networking and management services.

Some of its existing portfolio companies also achieved milestones in 2015: ProNAi Therapeutics Inc. closed its initial public offering July 21; Tetra Discovery Partners closed a $1 million financing round intended to advance the company to clinical trials; and HistoSonics closed a $3 million bridge round to fund extended rounds of clinical human trials.

Other companies and their 2015 highlights were: Vestaron Corp. received EPA approval to remove the bee toxicity warning from its SPEAR Biopesticides; Zipments was acquired by Deliv, a same-day delivery service provider; and Ablative Solutions received certification to allow for a CE trademark on its Peregrine catheter.

Grand Angels also launched its second fund, the managed G.A. Venture Fund, which is focused on technology and life sciences companies currently generating revenue or pre-revenue with a clear path to exit, according to a press release.

Since its establishment, the fund already has closed on five deals.

“We are focusing primarily on life science, technology primarily in the business-to-business deals, advanced manufacturing and advanced agriculture,” said Vanderwel. “We believe those four sectors play to the strengths of our members as well as the strengths of the state of Michigan.”

Vanderwel said raising the second fund was a big accomplishment, and developed after evaluating the existing structure of the organization following a successful decade and wanting to ensure its continued success for the next 10 years.

“We thought a critical piece of growing the capability of growing the organization and helping to ensure its success for the next 10 years would be a process that would allow our due diligence to be deeper and more consistent,” said Vanderwel.

Grand Angels hired Paul D’Amato, who has been a member of the angel group for a number of years and also serves as managing director of Trout Creek Ventures, and as manager and director of the G.A. Venture Fund, which is also known as Grand Angels Fund II.

“With (D’Amato) managing the fund and leading the due diligence, we knew we would get a very consistent and top-quality due diligence process,” said Vanderwel. “Up to this point, our members have been volunteering to assist with due diligence, and it has been a very good process, but we still felt it could be better. So far we are seeing it is playing out as we hoped it would.”

D’Amato said the organization looks forward to continuing to find, hone and cultivate many outstanding early-stage companies in the community in 2016.

“We are excited by the quality and unique breadth and scope of early-stage companies that we can support through our experience and capital,” said D’Amato.

Grand Angels also was named a Top 3 Angel Group in the Great Lakes Region in 2015 by the Angel Resource Institute based on cumulative deal flow from 2010-2015.

As the organization looks ahead, Vanderwel indicated it has an opportunity to look at a wider variety of investment deals due to flipping its model. While Grand Angels anticipates its current members will continue to invest individually alongside the fund, the new model has the potential to increase the amount of capital it can invest in any one deal as an angel syndicate.

“In the past we had a small co-investment fund, which co-invested with our members. Now our fund is the lead investor and our members are co-investing,” said Vanderwel. “We also think, with a fund that is about three times the size of our co-investment fund, we will be able to make some bigger investments. We think we will be able to even more effectively bring in more co-investors, other angel groups and other individual investors.”

Although the regional angel investment organization now has approximately 40 active members and its membership has been growing every year, Vanderwel said Grand Angels continues to look for new individuals to join the network.

“We like the increasing skill and wisdom and experience it brings to our group because we still use our members to help vet our deals,” said Vanderwel. “We want to continue to grow and to expand our capabilities, and are very interested in connecting with like-minded people who would like to invest in this space.”

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