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Calling On Angels

Martin Frey, a customer relations consultant and member of Olympus Angels and Utah Angels, sums it up in a nutshell: "We haven't run out of money to invest." With more angels in Utah than ever...

Written By: Grow Utah Ventures
Martin Frey, a customer relations consultant and member of Olympus Angels and Utah Angels, sums it up in a nutshell: "We haven't run out of money to invest."

With more angels in Utah than ever before, there is more capital available to young companies than ever before. And angel investors want to put it to work. But for entrepreneurs to tap into this funding, they need to know what angels are looking for, how best to work with them, and where to find them.

And they need a business that merits investment.

So we got inside the heads of angel investors around Utah, as well as some experts on angel investing, to figure out what makes angels tick and learn what you can do to be the right investment for the right angel. From their responses comes a primer for every entrepreneur who might be looking for help from above.

The Angel Opportunity

Angel capital is a rapidly growing segment of the equity capital markets. According to numbers compiled by the Ewing Marion Kauffman Foundation, about 500,000 new businesses are started every year in the United States. Of those half million companies, between 30,000 and 50,000 receive some type of angel capital. In 2005 (the most recent numbers available), angel investors in the United States invested about $23 billion compared to the $22 billion invested by venture capitalists. Those numbers translate into a huge percentage. Kauffman estimates that as much as 90 percent of companies who get outside equity capital, get it from angels.

"There is a growing importance of angel investors in funding start up and early stage companies," says Marianne Hudson, executive director of Kauffman's Angel Capital Education Foundation.

That was part of the motivation for Alan Hall and his associates in rallying the troops in Utah. Hall sees an ongoing need for capital for early stage companies, and he firmly believes that entrepreneurism is an important aspect of economic development. "But I'm just one guy," says Hall, who himself is a long-time angel investor based in Ogden. "We need hundreds of people like myself who are in a position to invest. So my philosophy has been to also act as a facilitator and encourage others to become investors."

A few groups, like Utah Angels, have been successful stalwarts in the Utah investment community for years. But in the past few years, angel groups have been surfacing all over the state — from the Cache Valley Angels to the Dixie Angels — mostly at the behest of Hall. Today, he estimates there are about 70 active angel investors in Utah's organized groups, and Brock Blake, CEO of FundingUniverse.com, estimates there are a few hundred more who invest individually or could be considered semi-active.

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