Closing the Gap

More access to capital is on its way to Southwest Florida start-up companies through a new angel fund.

The Gulf Coast Venture Forum is hoping to fill a funding void for start-up companies with the creation of a new angel fund.

The new source of capital for young companies in their first stage of growth, called the Tamiami Angel Fund I, is currently organizing and aims to invest in young companies that the Gulf Coast Venture Forum does not target.

Presently, the Forum works exclusively with so-called “second-stage” businesses — those that have not only generated their own viable business idea, but also have identified a concrete demand for their goods, developed a branding for their company, and obtained an initial investment to finance their operation. In other words, established companies.

One success story is NeoGenomics, a publicly traded biotech company based in the Fort Myers area (symbol: NGNM.OB).

NeoGenomics received a financial boost from an investment fund called Aspen Select Healthcare in early 2005 - a fund operated by Steven Jones, a Gulf Coast Venture Forum member.

After a decrease in share value over the remainder of '05, the company saw outstanding growth in the next year. On Jan. 3, 2006, NeoGenomics stock closed at 19 cents per share; a year later, the stock was trading at $1.61, an increase in value of nearly 850%.

Today, another Forum member, former CFO of Corning Life Sciences, Inc., Douglas Van Oort, runs NeoGenomics as interim CEO. Van Oort's role with NeoGenomics demonstrates the benefits of the Forum's access to what President Tim Cartwright calls “career capital” — semi-retired businessmen with executive-level experience at some of the most successful companies in the country.

By aggregating that career capital behind one investment vehicle, the Tamiami Angel Fund expects to be better equipped to overcome two obstacles that Cartright says Forum members often struggle with: due diligence and accurate valuation.

Diligent investorsshould be prepared to deal with any problem that presents itself to a growing company. By combining their intellectual capital, Fund members are able to handle almost any type of development issue, be it industry-or management-related.

The more accurately a business can be valued, the more likely that fund investors will achieve a solid return, encouraging more investment down the road.

Since the Forum's investment focus had been on partially developed companies, the group was not addressing the need for seed money faced by entrepreneurs with the newest business ideas.

The move to complement the Forum's activities with the Tamiami Angel Fund addresses an issue that President Tim Cartwright refers to as a gap in the “capital continuum.”

Cartwright says the Fund will invest in “gazelle” companies — those that are primed for rapid growth, and need cash to do so.

According to Cartwright, the Tamiami Angel Fund is the first of its kind to target companies in their first stage of growth in Southwest Florida. But angel investors are common in the venture capital world.

The “angel” designation refers to a form of accreditation, controlled by the SEC, that both the Gulf Coast Venture Forum and the Tamiami Angel Fund require of their members.

The term originated on Broadway in the 1920s, when “angel” investors ensured that the proverbial show would indeed go on. Those investors migrated with the film industry to Hollywood; from there, the process bled over into Silicon Valley, a major beneficiary of venture capitalism.

The impact of angel investing is continuing to expand today, as the Gulf Coast Venture Forum expands to include a Sarasota chapter. The move is motivated by a prevalence of area investors that have local economic development in mind, says Cartwright.

The Sarasota chapter of the Gulf Coast Venture Forum will hold its kickoff meeting on Oct. 14. Both accredited investors and entrepreneurs alike are encouraged to become involved with the Gulf Coast Venture Forum. More information about the group can be obtained at their website, http://www.gcvf.com.

Cartwright has a positive outlook for the area, seeing Southwest Florida as “an emerging region,” and seems genuinely excited about its growth prospects.

The same group of people that might be interested in working with the Gulf Coast Venture Forum will likely agree on one other issue as well—that small business development and the spirit of entrepreneurship will be the main driver that leads the Gulf Coast economy through these troubled times.