Monday, October 29, 2007

New angel investor group eyes national wingspan

By Christopher Calnan

The founder of Maine's only angel investment group is poised to launch a second group that will make its home in Bar Harbor. And in a departure from most angel groups, the group plans to make investments across the nation.

Charles Sidman said his goal is to raise a $20 million fund for the group, to be called ECS Angels, during the coming year. Once that's completed, Sidman said he plans to step down from his position as a professor of molecular genetics, biochemistry and microbiology at the University of Cincinnati in order to take on the role of full-time administrator.

Sidman, who is also a management professor in the university's College of Business Administration, said he's been an angel investor for 10 years. He founded Maine Angels in Portland, Maine, in 2003.

Angel groups traditionally invest in local ventures to keep them close to the entrepreneurs whom they are backing. But Sidman contends that such thinking puts "geography ahead of returns."

The availability and sophistication of electronic conferences, combined with angel groups teaming up on investments (known as syndicating), make long-distance investments more realistic, he said.

"Syndication is happening more, and there's a tremendous need for capital for good deals -- whether they're in Boston or Omaha," said Sidman.

Longtime angel investor George McQuilken, the founder of eCoast Angel Network in Portsmouth, N.H., said Sidman's model is a credible one, but more "adventuresome" than typical.

Most angel investments are of modest amounts, rendering long-distance trips for board meetings cost-inefficient, he said. Also, most angel investors want to be more than financial backers -- they like to be involved in their portfolio companies and support their region; that means staying close to home, McQuilken said.

Last year, Boston Harbor Angels formed after breaking off as the New England chapter of the California-based Keiretsu Forum, a national investor organization. The group split after two years as a Keiretsu chapter to give it more control over how it was run and to tailor its business plan to New England entrepreneurs.

ECS Angels plans to make investments in a variety of companies instead of focusing on specific industries, he said. Sidman also plans to keep the size of the group's membership open for growth.

Maine Angels, which has 29 members, has made about 14 investments during its four years of operation, he said. Although Sidman founded the group, he said he's no longer managing it.

The launch of ECS Angels increases to 22 the number of angel groups formally operating in New England. In June, a Connecticut angel investment group, called the Connecticut Angel Guild, began monthly meetings in New Haven and Stamford.

The strong national economy, combined with a capital gap that's been widened by venture capitalists making larger investments, is fueling the interest in angel groups, said Springfield-based consultant Paul Silva, the managing partner of Angel Catalyst, a consulting firm focused on angel groups.