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Home About Us B2B Club Breaking News Contact Donate Events / Programs Feedback Ideas Incubator Industry Clusters Links / Resources Progess Funds Progress Teams Public Art / Murals Publications		Breaking News November 20, 2005 - Angels boost fledgling businesses By Carlos Gieseken, Central Wisconsin Sunday When Stevens Point native Leon Ostrowski returned to Central Wisconsin eight years ago to retire, he brought with him 35 years of business development know-how gathered in Europe, Asia and the United States. In May, Ostrowski joined with the Portage County Business Council, Wood County's Heart of Wisconsin Business Economic Alliance and a group of private investors to form the Central Wisconsin Business Angels. It is one of a dozen similar groups in the state and hundreds across the country whose goal is to help entrepreneurs in the early stages of their businesses receive the financing and guidance they need to bring their dreams to the marketplace. "It's investing in all those things you need before you can even start a business," Ostrowski said of the $100,000 to $500,000 financing packages that are typically put together by angel networks. "Those amounts can't be obtained from a bank or other financial institutions because the businesses aren't developed yet." Small groups of people have come together to invest in start-up companies for centuries. But the formalized organization of these groups into their own, separate entities for the purpose of early-stage, or angel, investing, is a new phenomenon that has taken off over the last few years. Angel investing is different from venture capital investing, which normally involves millions of dollars and could include expanding a company's reach into a market. Angel investors look for the potential and business knowledge they see in a management team, whereas venture capitalists also look for a proven track record of a company. Early-stage investing is just that; funding without which a company wouldn't be able to get off the ground. Venture capital, for the most part, is geared for companies that are farther down the business life cycle. "If you don't have early-stage investors, there are not going to be any companies to put venture capital into," said Joe Kremer, director of the Wisconsin Angel Network, which helps support the networks across the state. The financing often comes in the middle stage of the angel investing relationship. "Sometimes I'll work with a company for two or three years before we bring it to the investment group for consideration," Ostrowski said, adding that during that time, attorneys, accountants and banks will be referred to the prospective business for guidance. "We do things to make sure their business idea is a legitimate idea that (it) has gone through the due diligence needed to get the project to the point where it can be financed," said Jeff Landin, executive director of the Portage County Business Council. "There's a variety of ways that we can provide support," said Connie Loden, executive director of the Heart of Wisconsin Business and Economic Alliance. "We can help with business plans and hold entrepreneurial boot camps to work to develop ideas. And it may be providing administrative support." Once the business plan has been ironed out, a 20- to 30-minute presentation is made to a roundtable of between six and 10 investors for consideration. If the investors are not interested, further guidance is usually provided. If accepted, then a discussion of terms and conditions of the investment, which could include participation by the angels in that company's board of directors, begins. "It's really the individual they're assessing. The idea is second," Ostrowski said. "The investors individually decide whether they like it. Usually between three and six are interested and continue the dialogue." Investors are encouraged to spread their available investment funds across several projects, instead of all in just one. This is done the same way mutual funds protect against failures, since the risk is spread out instead of concentrated on one business. Investors are required to have a net worth of $1 million or more, and must be willing to accept the possibility that a $10,000 investment in a company, for example, might be lost due to that business's failure. Ostrowski can be reached by calling 715-345-9555, for those interested in becoming angel investors or those with a business in need of early-stage funding.
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