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Angel Investing and Economic Development
June 2014
Presented to: VCEN 2014 Conference
Yes, Virginia…there is such a
thing!
VCC has built its reputation on…
 Financing affordable housing projects
 Funding community development ventures
 Delivering technical assistance to small businesses in underserved
markets
2
How did we do it?
1. Leveraging government guaranty programs
1. Partnering with private foundations and corporations for grant
funding and capital investment
1. Launching new loan products tailored for VCC’s target markets and
delivering technical assistance for borrower capacity building
3
VCC’s Vision as we expand our brand
To be the first choice for innovative capital and
collaborative leadership promoting vibrant local
communities and enhanced quality of life.
4
Innovative capital: What is angel
investing and why angel funds?
 Accredited investors invest growth capital in start-up and early stage
companies in exchange for (most often) an equity percentage and
expected ROI
 After “friends and family”, but before venture/institutional capital
 Individual angels are often successful entrepreneurs themselves
 Angel funds vs. angel networks/groups
 Operational efficiency
 As early stage funding moves upstream, more funding power
 Easier syndication on deals
 “Side-car” investing amplifies impact to small business
5
Collaborative leadership: VCC as
Administrator of regional angel funds
 Appalachian Regional Commission
 Federal-state partnership promoting economic and community
development across the Appalachian region
 Appalachian Capital Policy and Angel Capital Fund
 RAIN Source Capital
 Contracted by ARC to provide T.A. to VCC
 Industry leader in guiding rural communities through angel fund creation
and capitalization
 Three Phases
 Feasibility and design
 Fundraising
 First Organizational Meeting
6
Leveraging partners
 Entrepreneurs
 Serial
 In-residence/fledgling
 Angel investors
 Individual
 Corporations/Institutions
 Economic development officials
 Local
 Regional
 Service providers
 Professional (lawyers, accountants, bankers)
 Technical Assistance (SBDC, SCORE, etc.)
7
Leveraging capital
 Typically $1MM - $4MM in committed capital
 Smaller group of accredited investors (20 - 25)
 More formalized in structure
 Operating agreement
 Code of conduct
 Committees (due diligence, screening, monitoring)
 Administered (vs. managed) by a third party (e.g. VCC)
 All investment decisions are made by the investor members (not fund
administrator), usually majority rules
Thank you!
Questions/Comments
9
Thank you!
Questions/Comments
9

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Show me the money henderson

  • 1. Angel Investing and Economic Development June 2014 Presented to: VCEN 2014 Conference Yes, Virginia…there is such a thing!
  • 2. VCC has built its reputation on…  Financing affordable housing projects  Funding community development ventures  Delivering technical assistance to small businesses in underserved markets 2
  • 3. How did we do it? 1. Leveraging government guaranty programs 1. Partnering with private foundations and corporations for grant funding and capital investment 1. Launching new loan products tailored for VCC’s target markets and delivering technical assistance for borrower capacity building 3
  • 4. VCC’s Vision as we expand our brand To be the first choice for innovative capital and collaborative leadership promoting vibrant local communities and enhanced quality of life. 4
  • 5. Innovative capital: What is angel investing and why angel funds?  Accredited investors invest growth capital in start-up and early stage companies in exchange for (most often) an equity percentage and expected ROI  After “friends and family”, but before venture/institutional capital  Individual angels are often successful entrepreneurs themselves  Angel funds vs. angel networks/groups  Operational efficiency  As early stage funding moves upstream, more funding power  Easier syndication on deals  “Side-car” investing amplifies impact to small business 5
  • 6. Collaborative leadership: VCC as Administrator of regional angel funds  Appalachian Regional Commission  Federal-state partnership promoting economic and community development across the Appalachian region  Appalachian Capital Policy and Angel Capital Fund  RAIN Source Capital  Contracted by ARC to provide T.A. to VCC  Industry leader in guiding rural communities through angel fund creation and capitalization  Three Phases  Feasibility and design  Fundraising  First Organizational Meeting 6
  • 7. Leveraging partners  Entrepreneurs  Serial  In-residence/fledgling  Angel investors  Individual  Corporations/Institutions  Economic development officials  Local  Regional  Service providers  Professional (lawyers, accountants, bankers)  Technical Assistance (SBDC, SCORE, etc.) 7
  • 8. Leveraging capital  Typically $1MM - $4MM in committed capital  Smaller group of accredited investors (20 - 25)  More formalized in structure  Operating agreement  Code of conduct  Committees (due diligence, screening, monitoring)  Administered (vs. managed) by a third party (e.g. VCC)  All investment decisions are made by the investor members (not fund administrator), usually majority rules

Notas do Editor

  1. Real-estate centric revenue growth to build solid loan portfolio/bottomline; “soft services” to meet non-profit mission
  2. Direct impact leveraging strategic partners – very typical operating model for most econ dev entities.
  3. Just as there’s a sea-change in the social enterprise world (B-corps – which we are! - and non-profits in the same sandbox), as well as the investing world (impact investors vs. value and bottom-line investors), there’s a big change underway in the econ dev world in VA with VCC….(enter angel investing)
  4. For third bullet tie it to T.A. Touch on crowdfunding relative to fourth point….laws are still up in the air, so it’s a wait-and-see approach for us
  5. ARC and RAIN = model for convergence of angel investing and econ dev
  6. Institutions can be higher ed, foundations, econ dev., etc. Common denominator among investors is often altruistic – i.e. econ dev born out of affinity to a particular region Impact investors (patient capital) and “regular” angels
  7. As previously mentioned, note difference b/n this and an investment network/club (although mention syndication networks) Also note difference b/n this model (member-managed) and other fund models (with a fund manager)