Angels touch budding businesses

There are angels supporting entrepreneurs in Vermont, at significant profit to themselves and their communities.

Whether individuals or agencies, these angels help Vermonters get their businesses going and keep them in operation.

Ken Merritt of Merritt, Merritt and Moulton, a corporate security-focused law firm that represents a number of growing companies, has been involved with North Country Angels since its founding in 1993. He is also co-chair of Vermont Investors Forum. The executive director of both North Country Angels and Granite State Angels in New Hampshire is Fred Wainwright, a professor at Tuck School of Business at Dartmouth College.

North Country Angels evolved out of Investors Forum and has grown during the last few years, with approximately 10 Vermont businesses per year presenting their business strategies. Approximately 30 per cent of those have received investment from one or more of North Country Angels’ 45 members. Up to 10 or 15 members can invest in any one company.

North Country Angels looks at companies throughout the Northeast, such as technology-based companies coming out of Harvard University and the Massachusetts Institute of Technology. Any potentially viable company with a viable concept and business strategy and the potential for significant growth over a relatively short amount of time has an opportunity to present its position.

Angel investments generally consist of amounts between $100,000 and $1 million, with individual investors contributing between $10,000 and $100,000 each. Where smaller amounts are concerned, there are other options within the state. Larger accounts are handled as adjuncts or as a whole by such entities as venture capital firms.

With 10 to 40 percent invested overall, one or more of the investors will sit on an executive or advisory board. The expectation is that investors will earn a substantial return above the amount of money invested.

Fresh Tracks Capital L.P. of Shelburne manages $25 million in venture capital funds that are invested with a focus on Vermont and in adjacent counties in New York, Massachusetts and New Hampshire. Cairn Cross is co-founder and managing director of the fund at Fresh Tracks.

“Although by national standards we’re very small,” he said, ”by Vermont standards we’re big” In some cases, angel investors step in as initial investors, and Fresh Tracks follows up with investments at a later date.

Cross described the difference between angel and venture firms. Angels, he said, invest as individuals, each seeking his or her own profits. Venture capitalists are institutional investors who assemble a pool of capital from a number of partners and then invest that capital on behalf of those partners.

Fresh Tracks, he said, starts where the angels leave off, providing $500,000 to $1.5 million on average to each client, who must have a “compelling story.”

Fresh Tracks has invested about $7 million in approximately 10 companies in Vermont. Co-investors bring an additional $50 million in private capital to a project in conjunction with Fresh Tracks, with the same terms and conditions.

Economically, “the facts,” Cross said, “fly in the face of conventional wisdom and what is being reported in the local mainstream media.

“It is indeed hard everywhere to get venture capital funding, but within New England, Vermont is virtually tied with New Hampshire as the best places to get funding,” Cross said.

“Massachusetts is number one in the country. For every 24,000 people in Massachusetts, there’s one venture capital investment. In Vermont, there is one for every 88,000; in New Hampshire, 77,000. In Maine, it’s one for every 3 million people. In Vermont last year, seven venture capital companies got funded; five of those seven were funding we participated in, which shows the power of one very active company in Vermont.”

For companies with more modest visions, there are sources such as the Vermont Community Loan Fund in Montpelier. The loan fund provides revenue and support for small business, community facilities, affordable housing, community and child care facilities.

“Because we’re a private nonprofit, not a regulator like a traditional lender, decisions are based on project, social responsibility, sustainability, job creation and character,” said Kate Paine, marketing and communications manager.

Though the company receives federal grants and is also funded by investors and private contributions, “we don’t just measure our impact by the dollars we lend,” she said.

“We care about what dollars are doing in the community. If someone invests in us, that money is going to work right in that community anywhere in the state of Vermont. People like [to see] the impact of what that dollar does.”

Vermont Community Loan Fund has been working for 22 years with community banks and organizations that serve lower- to middle-income families and entrepreneurs. It goes beyond a credit number to consider a project.

“We try to step in to get a person’s project off the ground, move it forward, help the borrower build credit and build a success story;” Paine said. The end projects promise “a high social impact in our own backyard. People who need working capital, refinancing or equipment can come and talk to us,” she said.

Other companies that offer investment opportunities as well as funding include Vermont Venture Network and Vermont Investors Forum.

Economic, educational and advisory support is offered by such programs as BYOBiz at Champlain College, Digital Bridges at Middlebury College and the Vermont Experimental Program to Stimulate Competitive Research, headquartered at the University of Vermont.

Support and counseling are also available through private, state and governmental agencies including the Vermont Community Loan Fund; Service Corps of Retired Executives (SCORE); Vermont Small Business Administration; Vermont Department of Economic Development; Vermont Center for Emerging Technologies; Vermont Small Business Development Authority; Vermont Small Business Innovative Research; Vermont Small Business Development Center; Vermont Tech Council and the Vermont Software Development Council.

Vermont presents a multitude of possibilities in financing and support to assist those who are dedicated to their goals and in need of capital to begin or sustain the process.

It’s just a matter of finding the right fit.