Crain's Cleveland Business, Chuck Soder

Ohio’s angel investor groups are now flying in formation.  The seven groups, including two in Northeast Ohio, have agreed to share investment research with each other and to pass along promising investment opportunities in an effort to speed the process of finding and financing worthy companies.

The collaboration, one of the first of its kind nationwide, will help entrepreneurs who need to raise a lot of money do so more quickly, said Clay Rankin, managing member of Cleveland’s North Coast Angel Fund LLC. Mr. Rankin said the angel groups’ agreement also bodes well for the entrepreneurial climate in Northeast Ohio, which is home to the Akron ArchAngels, too.  “I think we’ll have the opportunity to attract more deals and keep more companies here as a result,” he said.

The seven groups of angels, which are wealthy individuals who invest in young companies, formed in January an Ohio chapter of the Angel Capital Association to facilitate efforts to work together. Their first effort was to sign in January a treaty stating that they will not hold other member groups liable for recommending or providing research on companies that don’t pan out.

They’ve also agreed to ask each entrepreneur with a viable business plan if he or she would like a summary of the plan sent to other angel groups, as many early-stage companies need more money than they can receive from a single angel group, Mr. Rankin said.

Even before the treaty was signed, North Coast Angel Fund and the Akron ArchAngels frequently worked with each other and with the Ohio TechAngel Fund LLC of Columbus, and the Toledo-based Core Network regularly has sent a representative to ArchAngels meetings.

The two local groups have had less contact with the Queen City Angels of Cincinnati, the East Central Ohio TechAngels, which is tied to Ohio University in Athens, and Rocket Ventures of Toledo. However, that situation has changed since the treaty was finished, said North Coast Angel Fund Executive Director Todd Federman.  “We’re talking more, we’re sharing deals, we’re sharing information,” Mr. Federman said.

The groups still will do much of their own research, but sharing information will allow them to spend time asking new questions instead of repeating old ones, said John Huston, a founding member of the Ohio TechAngels.  “We’ll be able to penetrate much more deeply than the skin coat,” Mr. Huston said.

Ohio’s angel groups were inspired to work together after seeing a presentation on the subject at the 2007 Angel Capital Association Summit last May. They heard about how more than 20 angel groups in the New England region not only are sharing information but also are holding quarterly meetings where representatives from each group watch presentations together.

The meetings have helped six companies find financing quickly without knocking on the doors of several angel groups, a process that can take months, said James Geshwiler, who’s heading up the New England effort from his position as a managing director of Common Angels in Boston.

The network also has given more individual angels connections to do deals outside the group, Mr. Geshwiler said.  “I think it’s a huge improvement,” he said.

Other angel groups are following New England’s lead, said Marianne Hudson,executive director of the Angel Capital Association.  Other regions considering or in the process of creating formal networks include the Southeast, the Pacific Northwest and Wisconsin and northern Illinois.

“They figured out the sum of the whole is greater than the parts,” Ms. Hudson said.

Clay Rankin, managing member of North Coast Angel Fund, said the angel investor collaboration will attract more deals. Photo credit: JANET CENTURY