We at Vested for Growth love to partner whether it’s with venture capital sources, or angels or individual core investors. And so, one of the ways we do that is with venture capital. We invested recently in a company that was a success for a venture capital firm and was growing but in order for it to continue to grow, it needed some additional capital and the equity investors didn’t want to dilute their original position. So they came to us- the equity investors- and said “would you consider this as a royalty opportunity?” and we were able to look at the numbers and even though a bank would look at it and it would be a set of losses, we could see that it was only losses because they were reinvesting what otherwise would be profit, back into the next stage of growth. And so, that made sense to us that it could be a royalty opportunity, so we did that deal. So we partner with venture capital in that way.
We also partner with angel groups. We once did a deal where we were approached by the company because they had just been turned down by eight angels, a part of an angel group. We, in fact, looked at the deal and were able to structure it as royalty financing- it was a merger and acquisition. The bank had done as much as they could, the seller was taking back some paper doing some seller financing and the equity that the new buyer was putting in still wasn’t sufficient and there was the “air ball” for about three hundred thousand dollars and we actually were able to structure that as royalty financing. Well recently, that same angel group turned down that opportunity, not because they didn’t love the company or the management team, it’s not because they didn’t believe in the growth proposition, but there was no clear exit. There was no way of positioning that company for sale in the next 3-5 years. So, it made the right decision as an equity investor to say no. But, we went back to that same group of eight individuals and they said “well yeah that deal’s great, that deal structure/that royalty, that answers the concern. We’d love to participate.” So sometimes we participate with angel groups when it’s appropriate to structure a deal as royalty financing.
So, we also partner with angels as individuals. We, sometimes, are doing a deal where to right-size our appetite, it’s something less than what the business needs; say that they need to raise a million dollars and our appetite is for a five hundred thousand dollar investment, we might then reach out to angels or individuals or co-investors who might go sidecar with us and do a similar investment on the same terms as we negotiated. And so, that’s another way that we participate. I think angel groups sometimes get approached by a business and it’s exciting and they believe in the prospects, but there’s no one in that group who has particular industry experience or a willingness to raise their hand and say “okay, I’ll be the champion for that one. I’ll take the lead on that.” It’d be a crying shame if that’s where it ended, so we at Vested for Growth offer ourselves to be that champion that would do the due diligence, that would do the deal structuring and help to enlist other angels that are interested in participating with us. So we have found that to be a really good way to partner with other angel groups and other angels.
The last way I’d like to offer for individual angels is that the way we raise our capital at the Community Loan Fund is through individuals as well as churches and banks and foundations- all private sources. So in terms of individuals, these angel investors, they’re investing in businesses because they want to invest locally. They believe in these entrepreneurs. And angel investing through equity is great, but it’s not the full picture. Another way of investing, even beyond royalty, is to invest in the Community Loan Fund because that’s a way for you to put your capital to work so that you know where your money is sleeping at night and you know it’s being put to work in ways that are expanding opportunities for entrepreneurs and helping them become successful to grow their companies. And actually, for individual angel investors, it’s also a way to diversify the type of investing you’re doing locally. Because, let’s face it, investing in startup firms and equity – high risk, high failure rate. With investing in the Community Loan Fund and providing our capital through existing New Hampshire businesses that are growing, we’ve never had a single investor not get repaid according to the terms of their investments. And again, I have to note that no, past track records don’t justify the future, but those are the facts. So we would welcome individual investors investing in us as the Community Loan Fund as a way of investing in local businesses.