Send Me an Angel (Investor)

Back in October, which seems like it was only a week ago, we had the kickoff meeting for a new group event in town called Owatonna Angel Network (OAN for short). We had an amazing presentation by Susan Langer, CEO of Spave - an entrepreneur who I have worked with for years - and discussed what exactly an angel investor network does.

For those who weren’t able to attend, an angel investor is someone with money (basically a net worth of over $1 million excluding their home, or making over $200k per year consistently) who invests in a new company that’s just getting started, generally called a “startup.” In exchange for this investment, the company can pay the investors back over time with interest (debt), give the investor a partial ownership of the company (called equity), or both.

The format for OAN is simple – think Shark Tank for Owatonna. We will have a pitch night every three months, where three startups will present their businesses to the members in attendance and answer any questions they might have. In addition to angel investors, we also have local professionals as members who can lend their experience and expertise to help both the investors and the startups. After the pitches, the angel investors and professionals can mark down which of the companies they are interested in meeting with in order to learn more and potentially help, and then we’ll connect those folks with the company. If an angel investor wants to invest in a company or not is up to them – the OAN is just facilitating the connection through these “demo nights.”

Our kickoff event attracted great interest from local partners, investors, and entrepreneurs – as well as partners from across the state. In the month since then, I have heard repeatedly how much this resource is needed not only in Owatonna, but across all of Minnesota. I heard directly from a statewide partner how angel investors, like the ones that I interacted with six years ago when I help start the Austin Area Angel group, have graduated to investing in venture capital funds, and are no longer actively investing in early-stage startups directly. Similarly, in a recent episode of the Freakonomics podcast, they addressed how venture capital funds have had their money become tied up in existing companies, waiting for them to exit (sell out to another company or start selling stock on the stock market). Between these two factors – “graduated” investors and tied up funds – the money to help fund early-stage companies is harder to come by than it was in the past. This is a nationwide problem, not just local to Owatonna or the state of Minnesota.

The OAN is filling a funding need that is being left vacant by other funding sources, including traditional loans, such as those through banks, which might not be a right fit for startups. This may be the case because the new company has no assets (equipment or buildings) to put up against the loan, or because the owners themselves don’t have a home or other “collateral”– something banks can require in order to give a loan. Giving up a piece of the company in exchange for dollars from investors can be all a company has or needs to get out of the starting gate, and onto the road to success.

As an entrepreneur myself, I have also seen how angel groups gatekeep access to their members, limiting funding opportunities for entrepreneurs in the process. That is not how we operate the Owatonna Angel Network. We want to help connect entrepreneurs with potential sources of funding - and to other resources, such as mentorship, advice, and networks.

If this sounds like something you would like to learn more about, or already know that you want to be involved, you can apply to join the Owatonna Angel Network at Owatonna.biz/oan. We’re lining up pitches for the new year already, so you won’t want to miss out!

This article was originally published in the Owatonna People's Press.