The North Coast Angel Fund LLC already has had a good 2007, even without the remaining five months.
Thegroup of angel investors last week struck a deal to back its fourthtechnology startup, Stanton Advanced Ceramics LLC of Cleveland, andit’s in contract talks with another technology startup that soon couldbe its fifth investment.
Not bad results, considering that the angel fund’s goal was to make three investments during all of 2007, its first full year.
NorthCoast Angel Fund managing member Clay Rankin said he was not trying tobe conservative when he made the original estimate of threeinvestments. He said he was “pleasantly surprised” to see so many goodinvestment opportunities come before the group.
“What we found was substantial pent-up demand,” Mr. Rankin said.
Executivedirector Todd Federman also gave credit to the group’s 99 members, whohe said have been quick to help screen deals before they are voted onby the entire group, which speeds up the investment process. All thathelp is important considering that North Coast Angel Fund hasconsidered 112 potential deals so far this year, Mr. Federman said.
“We’ve been very pleased with member participation,” he said.
Mr. Rankin did not guarantee that the fund would continue investing at this pace. But, he added, “I think it’s possible.”
A rising tide
Theangel fund’s active nature is welcomed by Stanton Advanced Ceramics andother young tech companies looking for money to get off the ground.
Stanton,which has developed a ceramic material to protect the insides ofhigh-temperature furnaces, could have collapsed if not for anotherorganization that finances early-stage technology companies: JumpStartInc. of Cleveland.
Stanton had been fueled by money from itsfounder, Karl-Heinz Schofalvi, and one of his cousins from the time itwas founded in June 2001 until it received a $50,000 investment fromJumpStart in June 2004. The company got $250,000 from JumpStart thatOctober, followed by a $500,000 investment from the group a year later.
Thatmoney “rescued” Stanton, according to Mr. Schofalvi, who said he had aparticularly hard time finding early-stage money after the Sept. 11,2001, terrorist attacks, even though he was an experiencedentrepreneur. In 2000, he sold a company he founded, Apex AdvancedTechnologies LLC, which is still in operation on West 130th Street inCleveland.
Mr. Schofalvi emphasized that it’s “critical” to haveorganizations such as JumpStart and North Coast Angel Fund that investin Northeast Ohio technology companies. JumpStart, a nonprofit, wasfounded in 2004, and Stanton was its first investment. Today it makes10 to 12 investments per year. North Coast Angel Fund, a for-profitgroup, held its first meeting last October and made its firstinvestment in January.
“The tide is raising all the boats in the water,” Mr. Schofalvi said. “We’re just one of the boats.”
NorthCoast Angel Fund closed a deal July 30 to put $800,000 into Stanton. Amajority of the total came from the fund, which contributed $200,000,and from investments by individual fund members.
Mr. Rankin saida main reason North Coast Angel Fund backed Stanton is because itsproduct, called “Fireslayer,” holds the potential to alter theindustries it targets. Those industries include the steel and aluminumsectors, which could save money if they could replace their currentfurnace linings with a more durable product.
That is why JumpStart backed the company, too, said Tiffan Clark, vice president of marketing for the group.
“It’s a potentially industry-changing technology,” Ms. Clark said.
Stepping on the accelerator
NorthCoast Angel Fund closed an investment in stem cell therapy companyAcelleRX Therapeutics Inc. of Cleveland last month. The groupcontributed $700,000, including $500,000 from individual members, tolead a $1.5 million round of financing. JumpStart contributed $300,000,and the rest came from Cincinnati venture capital firm Blue ChipVenture Co., Cleveland investment partnership Xgen Ltd. and individualinvestors.
AcelleRX, a Cleveland Clinic spinoff, will use themoney to prepare for clinical trials a technology that could treatchronic heart failure.
North Coast Angel Fund’s otherinvestments include Exacter Inc. of Columbus, which has developed asystem to find weaknesses in the power grid before outages occur, andNine Iron Innovations Inc. of Solon, which goes by Charitee Golf andprovides golf courses with video-monitoring systems for hole-in-onecontests.