Angel investors to be wooed by early start-ups

12 young firms to make presentations Oct. 10

Chance to win seed money

August 05, 2002|By Julie Bell | Julie Bell,SUN STAFF

A new event designed to generate investments by wealthy individuals in start-up companies is the most recent example of efforts to turn the tide on Maryland's shortage of investment capital for young firms.

The Angels and Eggs investor forum is still in the planning stages. But organizers are modeling it after Mid-Atlantic Venture Association events in which nervous executives from later-stage companies are sent, one after the other, into rooms full of venture capitalists to make a short pitch for money.

Unlike those events, however, Angels and Eggs is aiming for an audience filled with so-called angel investors - wealthy individuals willing to consider relatively small investments in companies too young to be of interest to venture capitalists.

Plans call for a panel to select 12 presenting companies for the Oct. 10 event from among applicants that already have space in one of the state's nine rent-subsidized business incubators.

The event is scheduled to be held at the Johns Hopkins University Applied Physics Laboratory in Laurel.

"This is putting pre-selected, quality, early-stage companies in front of angel investors," said Phillip Singerman of the Maryland Technology Development Corp., a co-sponsor of the event. "What there always is a shortage of is seed capital."

State officials have been working for some time to increase the amount of venture capital, and earlier-stage seed capital, invested in state biotech companies.

A December 2001 study commissioned by MdBio Inc., a nonprofit promoter of the state's biotech industry, found that the gap in venture capital needed for in-state biotech companies was $50 million to $100 million a year.

There are signs that that gap may be closing. Last month, Gaithersburg-based biopharmaceutical company MedImmune Inc. said it was starting its own venture fund to invest up to $100 million over three years in biotech companies.

A formal network of dinner clubs for angel investors also has been growing. The Chesapeake Emerging Opportunities Club LLC began enrolling members in February last year. It now offers monthly dinners at which two pre-selected companies give pitches for investment.

But unlike angel clubs such as Chesapeake, the Angels and Eggs event will help the selected companies prepare, said Michael Haines, a small business development official for the Howard County Economic Development Authority.

After a panel, to include angel investors and experienced entrepreneurs, selects the 12 presenters, they will be assigned coaches to help polish their presentations.

The idea came out of strategic planning Haines and others recently did. Haines' job includes helping to oversee the Neotech Incubator in Columbia, where young companies get rent subsidies and other assistance.

Floyd Taub, chairman of LifeTime Pharmaceuticals Inc. in College Park, said his company would apply to make a presentation.

"The venture market is actually surprisingly inefficient," he said. "It is hard for those interested in making investments to efficiently speak with a number of small companies. It's hard for small companies to make contact with investors."

He said the Angels and Eggs event should help.

To request an application, call Charina Chatman at 410-313- 6550 or e-mail for one at cchatman@hceda.org.

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