I found an article about a Minnesota-based maker of high-end athletic mouth guards in the Sunday edition of the Minneapolis StarTribune (ironically the article is only available in the print edition of the paper…what are they thinking? I’ll provide a link if/when they post it). While there is no strong design connection here, the story struck me as an excellent example of how a start-up company can use angel investors for that important initial funding surge. Bite Tech Inc. has developed “performance mouthware” technology that they claim reduces stress on the jaw and, in turn, improves the strength and endurance of athletes competing in sports ranging from football to golf. As the word has spread about this breakthrough product, pro athletes have been lining up to invest in the company. Adrian Peterson of the Minnesota Vikings, and NHLers Brett Hull and Marion Gaborik are among an impressive list of pros who have invested anywhere from $25,000 to $1 million each.
Angel investing is a common strategy for “phase one” or “first round” funding of the start-up process. Often, an angel investor is an affluent individual who provides capital—usually in exchange for convertible debt or ownership equity. According to Wikipedia, a small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital. Angels typically invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund. This strategy is similar to a “friends and family” approach which is a common way to gather seed money.
In a time when banks are being stingier than ever about small business loans, an angel strategy may make sense for designer/entrepreneurs who have a business concept that requires more money than they have easy access to. Our industry is filled with successful firm owners—many of whom are looking for new ways to build their business and generate revenue—hence, the design profession may be filled with potential angels.
So, where do you find these angels? Click here for an article from Inc.com that provides more information on this category and links to more resources.