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
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How did we do it?
1. Leveraging government guaranty programs
2. Partnering with private foundations and corporations for grant funding and capital investment
3. Launching new loan products tailored for VCC’s target markets and delivering technical assistance for borrower capacity building
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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.
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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
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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
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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.)
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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
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Thank you!Questions/Comments
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