A new angel fund has been started, called South coast Angel Fund II whose objective is to capitalize on the regions emerging and legacy core competencies within the following:
• Industrial technology
• Advanced manufacturing technology
• Defense technology
• Water management technology
• Off-shore technology
• Arts and culture technology
• Education technology
On Monday, Bayoubuzz publisher, Stephen Sabludowsky, engaged in a Google Hangout interview with the Fund Executive, Jon Atkinson, to discuss Angel Fund II, its purpose, history and opportunities.
ATKINSON: So my title is Fund Executive for South Coast Angel Fund II. We are a member managed committed capital angel funds based out of New Orleans but we cover the Gulf Coast region we are in the process of putting together our second fund and my role is to facilitate and to administer that fund on behalf of the fund's membership.
SABLUDOWSKY: That's great, now how does this differ from venture capital?
ATKINSON: Angel investing is typically and historically something that happens before a company goes to venture capital. Typical spectrum is, a company would have exhausted their personal resources and their friends and family resources and then they would start to look outside for capital to continue to fund the idea
That's where an angel investor might come in. Historically this is the wealthy individuals that are interested in getting involved with the company so they would write a check and bring expertise to the company.
Over the last 5 to 10 years you've seen the emergence of angel groups and particularly angel groups with increasing sophistication and size, banding together to do larger deals more sophisticated deals, deals that may feel like a traditional venture capital profile.
We are on that spectrum and we try to mobilize more capital than an individual angel might be able to do by himself as well as for expertise in both evaluating companies and helping the portfolio companies scale long term
SABLUDOWSKY: Okay so the focus is upon Internet and biotech and the fact that it's in the Gulf area so it's going to be businesses that are associated with the Gulf Coast, am I correct?
ATKINSON: sure, so, the types of investments we make are ultimately determined by the profile and composition of the membership so I personally do not pull the trigger on what type of investments we make, I manage that process for the membership. I think that's an important distinction to make.
Difference from the venture capital model where you might be talking to someone who is actually is employing a managed fund model and is making those decisions directly. That said, my investment piece and what I'm out talking to our members about is that the strongest entrepreneurial companies for our region are going to be the one that dovetails with the regions legacies and emerging core. That is, where we see that is advanced manufacturing--any type of business-to-business, industrial technologies type-plays, biotechnology, Ed Tech, arts and culture to a certain extent, were seeing some exciting things coming out of arts and culture..businesses in those industries have a very nice petri dish in which to grow in-- in this region and there's existing infrastructure to help them scale.
It would be much harder to scale a social media play here in New Orleans then it would be in Silicon Valley because that infrastructure is not here even if we were to start one, and it was the greatest idea on the planet, it would probably end up in Silicon Valley before it became the next Facebook or the next LinkedIn, just because that's where the resources are.
I think this region is really in front of trends in on-shoring and mass customization in manufacturing--you know we have a history of doing that here and we have low cost under-utilize infrastructure in the deep water port, warehouse facilities, manufacturing infrastructure , manufacturing expertise with the number of engineers we have, to be able to be in front of that next industry instead of chasing the previous one.4:08
SABLUDOWSKY: So, if I want to look at your portfolio in terms of the first funding, I would be able to go to your website and see the portfolio
Yep. The first fund was over $2 million and it was composed of 43 members and we made five investments. Those five investments are all listed on our website and I would say that they align pretty well with that piece. We're a little heavy in defense technology space, I have two companies that were loosely associated with the defense when the investments were made, both of which ultimately are considering pivoting and applying their products in more consumer oriented areas, so I think that has been a fairly successful investment strategy for us.
That fund is also beating the expected benchmarks for an angel investment portfolio of its size and vintage. Typically after two or three years you would expect about half the companies to fail. Of our five investments, four are still viable concerns and moving towards their ultimate goals which we're very excited about.
SABLUDOWSKY: Absolutely, so as far as this fund, I read that you will looking for roughly $4 million, is that correct?
ATKINSON: That's correct, so $4 million dollars, about 60 people, is where we will open up and our structure allows us to continue to raise and bring new members in even after we start looking at companies. So our hopes are that it could grow upwards, at that
SABLUDOWSKY: So who are you trying to reach, are you trying to reach other investors, are you trying to reach companies that are looking for growth opportunities, or both?
ATKINSON: That's a great question. Right now, today, I'm looking primarily for people who would be interested in investing in this space. our mission is to educate them about the opportunities that are out there and to facilitate their getting involved. Once we hit that four million dollar mark, which we anticipate getting to fairly shortly, we will be flipping that switch and the messaging will be for potential investment opportunities and companies looking for investments
Right now have two upcoming events--we're calling it Angel investment 101 seminars, they are educational seminars for accredited investors that may or may not have experience in Angel investing to show them what it is and how they can get involved
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