Friday, September 12, 2008

N.H. angels respond as deals slow

By Christopher Calnan

Louden, N.H., is well known for its speedway. But a group of organizers want speed to be a greater factor when it comes to investing in and launching businesses in the Granite State.

The New Hampshire Small Business Development Center has helped launch angel investor groups in Nashua and Keene, N.H., during the last couple of years — and next month will host the Speed Venture Summit in Manchester to put companies looking for capital in front of local investors.

Keene-based Monadnock Angel Investors Group marks its one-year anniversary this month, and while it has yet to invest in technology, Gary Oden, director of the SBDC’s Keene office, said he expects a tech investment within 12 months. Monadnock has attracted 17 investors toward a goal of 25 total, said Oden.

The Nashua group, Northeast Angel Investment Group, has made six tech investments — of its nine total — since August 2005, when it launched, said founder Hollis McGuire, director of the SBDC’s Nashua office.

The Speed Venture Summit is expected to attract about 50 companies looking for investors and representatives from 25 investment groups, said steering committee member Tim Platt, a director of Preti CorporateFinance. The event is scheduled to run from 2 p.m. to 7 p.m. on Oct. 28 at the Radisson Hotel in Manchester.

Next month’s event is expected to increase deal flow while encouraging deal syndication among the Granite State’s angel groups, said investor James St. Jean, founder of Francistown, N.H.-based First Ascent Ventures LLC.

“We’re trying to build a stronger communication network between these groups,” he said. “We’re part of the Boston ecosystem, but New Hampshire has sort of its own personality.”

Connecting New Hampshire entrepreneurs with investors has become more difficult since the national economy slowed, he said. “Right now, things seem to be kind of stuck,” Platt said. He expects the summit to become an annual event — as long as there’s demand for it.

One portfolio company of the Northeast Angel Investment Group, ZS Genetics Inc. is based in North Reading but operates in Durham, N.H. It has raised about $3 million from several angel groups since it launched in 2003.

Multiple angel groups benefit both investors and entrepreneurs because they enable prospective investors to network with each other on due diligence, expediting the funding process, ZS Genetics vice president of finance Thomas Abert said.

The popularity of angel groups is rising and the addition of the two New Hampshire groups increases the number in the Granite State to six. At least 24 angel groups now operate in New England.

That growing popularity resulted in a sharp increase in the number of expansion-stage deals completed by angel groups last year, according to an April report by the Center for Venture Research at the University of New Hampshire.