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|Articles - February 2011|
|Thursday, January 27, 2011|
Page 4 of 7
People who get involved in the Oregon Angel Fund tend to get intensely involved. Many describe the group as a family — a large, boisterous family with strong opinions and lively debates, but also a prevailing sense of civility and decorum.
The fund’s investors meet eight or nine times per year and pore over between 80 and 100 business plans annually. They vote on which companies they want to present and organize due diligence teams led by volunteers with relevant expertise to research the selected companies. Then at the next meeting they entertain 12-minute pitches from top executives, followed by a question-and-answer session. The companies are excused from the room and the due diligence teams present their initial findings along with a recommendation to hold off or to intensify research. The group votes on whether to delve deeper.
Once the investors decide they want to learn more, they dig into everything they can find, posting their findings on a shared Angelsoft website. Investors read the reports and express their enthusiasm and concerns at the following meeting before voting thumbs up or down on an investment deal negotiated by the fund managers. “Sometimes it [fails] and there’s a sigh,” says Pozzo. “But when it happens there’s applause and we break open the bottles of wine. Then we call the entrepreneur and tell them, ‘Good job, we got the thumbs up. Now let’s get this deal done.’”
The process does not end once the deal is signed. The investor who leads the due diligence effort usually ends up with a seat on the company’s board. The operating ethic is to mentor rather than meddle; the motto: “nose in, fingers out.” Individual angels move outside the group to add new investments to the pot. And with the entrepreneur’s permission, the group shares its research with other outside investors to bring in new money.
These aren’t just feel-good processes. They’re designed for results. Rob Wiltbank, an associate professor of strategic management at Willamette University who has written several research papers about angel investing, says most individual angel investments fail but a diversified portfolio of angel investments can produce average returns of $2.50 for each dollar invested over five years. The catch is that about 10% of angel investments produce 80% to 90% of the returns. Wiltbank recommends investing in 10-20 companies to improve the odds of success.
Wiltbank says the Oregon Angel Fund's strategy of pooling expertise and refreshing the fund annually addresses the two most important rules of angel investing: to invest widely but also carefully. “I’m very familiar with the Oregon Angel Fund model and I’m a fan of it,” says Wiltbank. “The key is the people and the expertise they have.”
Rich Bader, a board member of the state's Oregon Growth Account, is also a fan. “The processes that the Oregon Angel Fund has put together are very sound,” he says. “We’re pleased with the quality of the investments they’ve made and the level of due diligence.”
Since embracing the investor-driven, participatory model, Rosenfeld says he has no interest in going back. “It’s like a private sector-driven stimulus with state support. It’s not coming from the halls of government. It’s coming from individual businesspeople who could be on their yacht in the Caribbean or in Palm Springs but instead are here in rainy Portland spending their rainy afternoons with us. It’s a statement that people care about Oregon and its economic future.”
Thursday, July 03, 2014
BY TED AUSTIN & MIKE BAELE | GUEST CONTRIBUTORS
The Office of Economic Analysis announced that Oregon is currently enjoying the strongest job growth since 2006. While this resurgence has been welcome, the lingering effects of the 2008 “Great Recession” continues to affect Oregon businesses, especially with regard to estate planning and business succession.
Thursday, May 29, 2014
BY LEE VAN DER VOO
A forest collaboration saves the Rough & Ready Lumber Company.
Thursday, May 29, 2014
How serious a problem is climate change? Readers want to have their cake and eat it, too.
Tuesday, June 03, 2014
Citing the transition to catch shares management as a key to rebuilding stocks and reducing bycatch, 13 species caught by the West Coast trawl fishery today earned designation from the Marine Stewardship Council (MSC) as sustainable.
Thursday, May 29, 2014
BY JESSICA RIDGWAY
How the president of BlueVolt spends his free time.
Friday, May 30, 2014
BY DEBRA RINGOLD | OB GUEST CONTRIBUTOR
Since 1970 the performance of our public education system has steadily deteriorated.
Tuesday, July 08, 2014
BY LINDA BAKER | OB EDITOR
The New Yorker recently published a sharply worded critique of “disruptive innovation,” one of the most widely cited theories in the business world today. The article raises questions about the descriptive value of disruption and innovation — whether the terms are mere buzzwords or actually explain today's extraordinarily complex fast changing business environment.
Update: We checked in with Portland's Thomas Thurston, who offers his data driven take on the disruption controversy.
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