New Seattle Angel Fund Forming to Back Northwest Startups
Seattle Angel, which over the last three years has focused on introducing more qualified people to angel investing, plans a Northwest-focused investment fund set to begin early next year.
The investments will made through the Seattle Angel Fund, a separate legal entity managed by Susan Preston, who is also general partner of the CalCEF Clean Energy Angel Fund and the Buerk Endowed Fellow for Entrepreneurship at the University of Washington. (Preston is pictured above.) The fund aims to make five to seven investments each year in “launch stage” companies based in Washington, Oregon, Idaho, Montana, and Alaska, but will have no industry focus.
It’s not the only new venue for angel investors in the Seattle area. The W Fund, focused on companies emerging from the University of Washington and other research institutions, has held events this summer for individuals interested in investing in early-stage companies alongside the fund.
Participation is limited to accredited investors—individuals earning at least $200,000 a year or with a net worth excluding their home of at least $1 million. The Seattle Angel Fund (SAF) will require participating investors to commit a minimum of $25,000.
That’s about five times the minimum buy-in for the Seattle Angel Conference, which exposes newbie investors and entrepreneurs to things like the due diligence process, startup pitches, and term sheets over the course of two months, concluding in a group investment. One of the goals of the Seattle Angel Conference—now in the midst of its sixth run in Seattle, culminating with the conference itself Nov. 12—is helping more individuals get comfortable investing in young companies. The hope of organizers is that some will get hooked and help grow the community of local angel investors, thereby strengthening Seattle’s foundation for entrepreneurship and innovation.
Seattle Angel estimates that less than 500 people invest in local startup companies, despite some 60,000 people in the Seattle area who are qualified to do so.
SAF plans to begin raising capital soon, with a maximum for the first fund of $2.45 million, Preston said via email. The first close is scheduled for early 2015, the same time the fund will begin evaluating companies for investment. Due diligence will be performed by fund investors, who will also make the investment decisions.
It’s modeled on the Oregon Angel Fund, which has its roots in Oregon Angel, an investment education and startup pitching event. About a dozen investors banded together to back the company with the winning pitch at the event. That was about 10 years ago. Those investors went on to begin the initial Oregon Angel Fund in 2007, which has since grown to about 170 investors wielding $7 million in 2014, founder Eric Rosenfeld told me earlier this year.
In a news release announcing the fund, SAF organizers credit the Oregon Angel Fund for “growing the startup economy of Oregon and Southwest Washington,” and contributing to “the collaborative nature of Portland’s community of investors, entrepreneurs, and advisors.”
The W Fund, meanwhile, is also looking to attract angel investors with a University of Washington affiliation and expertise to invest companies based on UW technologies. W Fund general manager Linden Rhoads told me in July that the fund has been organizing “Alliance of Angel type pitch it days, where the companies that the W Fund is funding pitch to interested angels.” This invitation-only effort is aimed at alumni who are also accredited investors, she said, and is modeled on a group called Stanford Angels & Entrepreneurs.