The next big step in the evolution of Buffalo Niagara’s angel capital ecosystem is underway. Buffalo Angels, LLC recently issued a private placement memorandum to form the region’s first formalized angel capital investment fund, giving early-stage companies in Buffalo Niagara a fantastic new opportunity to access capital at a critical stage in company development. Angel capital is defined as equity investment in high growth, early-stage ventures made by formal angel groups or individual investors. Angel investments are typically made in the gap in a venture’s development between the company’s seed or pre-seed capital raised from “family & friends” and when an institutional venture capital firm is ready to invest. Buffalo Angels, LLC will provide a more formal and defined approach to funding these ventures, according to Jack McGowan, Executive Director of Buffalo Angels, LLC.
To date, angel investing in the Buffalo region has been administered under the network approach, whereby investors individually make a decision on companies in which they will invest. The Buffalo Angel Network has worked closely with the Western New York Venture Association (WNYVA), utilizing the group’s bimonthly meetings as its primary screening process. In addition to companies that have presented at a WNYVA meeting, the new Buffalo Angels, LLC will have its own screening process and will also hear from companies that have not presented at a WNYVA meeting. Instead of having each individual angel decide whether or not to invest or co-invest with other individuals, Buffalo Angels, LLC will make its investment decisions based on a majority vote of its members. The fund will have a defined range for investment amount, typically from $100,000-250,000, with an additional $100-250k reserved for a follow-on round.
The fund plans raise a minimum of $2 million with investment units of $25,000 each. It is open only to accredited investors*. While the fund is not restricted to investing only in regional companies, its stated focus is on companies in Buffalo/Upstate New York and Southern Ontario. Investments made outside this region will primarily be those that are co-invested with other qualified angel groups or funds, an opportunity for multi-region collaboration that is far more difficult under the existing network approach. This fund model is a trend that has slowly been growing around the US. The Seed Capital Fund of Central NY is an example of such a formalized angel group.
For more information on Buffalo Angels, LLC, please contact Alan Rosenhoch at arosenhoch@buffaloniagara.org.
*”Accredited Investor” as defined in the Securities Act of 1933 for individuals means a natural person who has individual net worth or joint net worth with the person’s spouse that exceeds $1 million at the time of the purchase,” OR “a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.”
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