Alliance of Angels raised $1.3 million for a brand new “Innovation Fund” that can again 10-to-12 early-stage startups over the following yr, principally within the Pacific Northwest.
Based in 1998, Seattle-based AoA is a nonprofit consortium of traders that sometimes invests round $10 million in 20 corporations per yr. That cash comes from greater than 150 AoA members, every investing individually.
AoA additionally had a standard multi-year seed fund that it used to match investments made by its members, sometimes at 25% of what members make investments collectively in an organization.
The Innovation Fund is completely different. It’s not only for matching investments, and it offers AoA extra flexibility to maneuver sooner when approached by entrepreneurs. It is usually an annual fund, which permits new members to hitch in on a yearly foundation.
“We expect it is a good strategy to watch out whereas investing, however be extra expeditious with it,” stated Eric Larsen, fund administrator for the brand new fund.
Funding selections are decided by member vote. There are about 50 individuals within the fund. Returns are distributed on a pro-rata foundation based mostly on particular person funding quantities.
Larsen stated AoA drew inspiration from different angel teams utilizing an identical technique, together with Tech Coast Angels of San Diego.
“They discovered that quite a lot of their members shifted from writing their checks individually to investing via the fund as a result of they preferred the diversification,” he stated.
The brand new fund is sector agnostic, with about 70% of investments anticipated to go towards Pacific Northwest corporations.
Very similar to different Seattle corporations reaching past their yard — Madrona Enterprise Group, Flying Fish, and so forth. — AoA is now wanting throughout the nation for investments.
“We nonetheless have desire for the Pacific Northwest, however we’ll look nationally,” Larsen stated.
AoA has already backed two startups from the brand new fund.
Larsen stated AoA is seeing influence from the financial downturn, particularly with downward strain on valuations. “We’re paying extra consideration to financing danger — can an organization proceed to boost the cash it wants?” he famous.
Initially began underneath the umbrella of the Know-how Alliance, AoA spun out of the nonprofit in 2012. It has pumped greater than $125 million into 200-plus startups, with greater than 40 exits.