Angel investors don’t just
look for high-tech

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By Stephanie Kendrick
skendrick@starbulletin.com

John May's angels don't have beatific smiles or large fluffy wings.

And you won't find them on the shelves of New Age gift shops.

But they are the stuff of visions, at least for entrepreneurs looking to grow their businesses.

May, who will speak in Honolulu tomorrow as part of the University of Hawaii Kipapa lecture series, is the co-author of "Every Business Needs an Angel" and the co-founder of New Vantage Group. The Washington, D.C.-area firm manages funds for angel investors.

For the uninitiated, an angel investor is a disinterested individual (or group of individuals) who provides early-stage funding to a business.

Or as May put it, "It's the money that is in between friends, families and fools; and professional venture capital."

In addition to investing financial capital, an angel investor plays an active mentorship role in the fledgling concern.

"The wonderful thing about an angel is they can be just a phone call away and be a kitchen cabinet or be a negotiating partner in the company," he said. The structure of the relationship varies with each case. Conversely, the involvement of venture capital partners in a business is much more formulaic. The types of investments the two groups are likely to tackle varies too, according to May.

"Angels are very independent. The VCs are professionals who are managing other people's money," he said. Therefore angel investors are more likely to consider non-tech businesses, especially if they have a background in that area.

May has seen breweries, concierge services, and food service companies get funding. "They're heard of less because they're not as sexy," he said.

May's talk is titled "Dancing with Angels in Hawaii: Secrets of Getting Your Startup Funded."

One of his secrets is to look for investors who know the business you're in. This adds to the mentorship capital they will be able to invest. It also is consistent with the message investors are getting from people like May.

"I would encourage people in any community to look at recycling their wealth. Investing in areas they know instead of chasing the hot new thing," he said.

May manages three angel investment clubs. These groups of individuals meet monthly to evaluate a set of supplicants presented by May and his partner. "They get a screened set of opportunities," said May. Then the investors vote on which petitions the club will take on.

May said there is money available despite the downturn in technology. And he was upbeat about Hawaii's prospects.

"You have to have people who are willing to take risk, you have to have the entrepreneurial mentality and then you have to have an infrastructure in place," he said. "I see that beginning to happen here." More of an effort needs to go into marketing local efforts to diversify the economy, said May.

"There is certainly a lot of room to grow," he said.

Two particular advantages in Hawaii, according to May, are its proximity to and experience with Asia, and the presence of military and other federal funding.

"On the mainland, a big growth area is commercializing government technology," he said. Hawaii is well-positioned for that work, said May.

The UH College of Business Administration presents May's talk tomorrow at 5:30 p.m. in the School of Architecture Auditorium on the Manoa campus. The event is free.