Business - Dave Gallagher

POSTED: Sunday, Mar. 15, 2009

Bellingham Angels seeing more investment chances

The fear and uncertainty that has tightened up credit in this economy is providing opportunity for one local investment group.

In 2008, the Bellingham Angels invested $2.2 million, more than double the amount of 2007. The expectation is the group will top the 2008 figure this year, said Bruce MacCormack, a representative of the group. A tough economy tends to draw out people with great ideas but little money, but there is another reason for the group's continued growth: It is also maturing as an organization.

An angel group provides equity capital to early- and mid-stage companies, something the Bellingham group has been working on since it started in 2005. The goal for the investors is two-fold: To help local companies with great ideas reach the next stage of development and get a good return on investment.

The group capped its membership at 50 investors to keep it manageable, but it also has been forming relationships with 12 other angel groups in the region. This helps if the group comes across a great startup that it can't fully fund.

"If we can't fully fund a company, we'll now be able to go to another angel group to see if we can get more investors," MacCormack said. "The other groups will know we've done our due diligence on the company."

The group has made 24 investments in the past three years, totaling $3.7 million. Some regional companies include Yapta, Tatango and Audience Central. Much of the interest in the group these days is in technology and the health care industry. Social networking in particular is popular right now, MacCormack said.

Whatever the company, the key is to provide funding that will produce results quickly - MacCormack said investors want the company to hit that next stage in three to five years and they want to be out of the company by then. That's a little different from venture capitalists, who tend to fund at a later stage and stay in longer in order to get a bigger return, MacCormack said.

The group originally wanted to focus on Whatcom County, but has had to look regionally in order to find potential candidates for funding. They have also been busy putting together breakfast workshops and other events for investors and potential candidates.

"We still try to focus on Whatcom County, but we've had to go farther, including Vancouver (B.C.)," MacCormack said. "At the beginning, we thought we'd see more tech innovation companies here, but that hasn't happened yet."

MacCormack believes what's missing locally is a step between education and getting a business going. He said the programs at Western Washington University and Bellingham Technical College do a great job preparing students for high-tech jobs, but there's a big jump to starting a company.

"What we need is a brick-and-mortar incubator to help fill that gap and help launch an idea," MacCormack said.

While the current economic climate is providing more opportunities for the group, it's still going to be a challenge for companies looking for funding.

"Investors are cautious right now, but the more due diligence that is done, the more likely they will invest because of the opportunity it represents," MacCormack said.