Wednesday, April 16, 2014
Maine Angels' $9.7 million in investments over 10 years has yet to produce a return, but that patience may be close to paying off.
Ben Polito, president of Pika Energy in Westbrook, holds one of three blades on a personal-size wind turbine. Polito said he appreciates the mentoring he gets from investors.
John Patriquin/2013 file photo
Gelato Fiasco co-founder Josh Davis, shown at the company’s flagship shop on Maine Street in Brunswick, has received assistance from Maine Angels investors.
John Ewing/2013 file photo
The group of 63 Mainers invests in and mentors startup -- or early stage -- companies with the goal of turning a profit after three years. Maine Angels has had to wait a little longer, but a few investments are "on the cusp of hitting it," said Maine Angels chairwoman Sandra Stone.
"Activity breeds activity. As we do more deals and get more investors, more entrepreneurs apply and then you get more interesting deal flow, and that helps the whole process," Stone said. "This isn't philanthropy. But people are eager to learn. People want to stay invested and give back. But there's an expectation of a return someday."
Last year, Maine Angels invested a record $3.4 million in 21 companies throughout New England, including $1.5 million in eight Maine-based companies. For its 10th anniversary this year, the group isn't focused on topping the record.
Instead, it is expanding its membership ranks, diversifying the investor pool by attracting more women to the group, and perhaps starting satellite locations in the Bangor and midcoast areas.
So far this year, Maine Angels has invested $497,000 in 10 deals -- including six follow-on investments in existing enterprises and four investments in new companies.
The group expects to close two to three additional investments in September.
"It's cool to be around people who think outside the box. I find it exciting. It's a little infectious. I'm loving it," said Stone, who expects to be nominated for a second two-year term as chairwoman this fall.
This year's investment total will likely fall short of last year's record because investors have more attractive options, such as a more buoyant stock market, and fewer extra incentives in Maine because the Maine Seed Capital Tax Credit Program has expired.
"I don't have a crystal ball on the year. The stock market has done well, so there are more attractive options for investing right now," Stone said. "It takes a lot of work to be an angel investor. You have to do some due diligence versus the stock market, which is less work."
ENGAGED INVESTORS DESIRED
Some investments are as small as $50,000, but more likely they are in the range of $150,000 to $200,000, Stone said.
The group has expanded to 63 members, about doubling in size during Stone's two-year tenure. The average investor's annual investment is $25,000 spread among various projects.
The individual investors must meet certain income or net worth requirements set by the U.S. Securities and Exchange Commission to become "qualified investors." There are several requirements, but generally a qualified or accredited investor must either have a net worth of $1 million or have an annual income of more than $200,000.
For most of the Maine Angels, the investments through the group represent just 10 percent of their portfolio, Stone said.
"You have to have money and know you might not get it back," Stone said. "We don't need watchers. We want investors who are engaged and involved."
Maine's network of angel investors is relatively small compared with states such as Massachusetts, New York and California.
"In Maine, there's money to do this kind of thing, but Maine is not seen as a place for investors to get their money out in a fairly timely manner," said Charles Colgan, professor of public policy and management at the University of Southern Maine's Muskie School of Public Service.
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