Angels of Southwest Louisiana — a “Shark Tank”-style investment group — is ready to empower emerging start-up companies.
Ron McGinley, the nonprofit organization’s founder and chairman of the board of directors, said the idea for the group was formed following the rebuilding efforts of Hurricane Rita.
“I began talking with several community leaders, business leaders, people here at the Chamber about having some regular entrepreneurial activity and organizing a network of Angel Investors,” McGinley said. “There are some deep pockets around here if you can get them to participate.”
An Angel Investor is a high-net individual who invests directly in promising entrepreneurial business, McGinley said. They are accredited by the Security and Exchange Commission and typically have a net worth of at least $1 million in liquid assets.
He said in the summer of 2011 George Swift, president and CEO of the Southwest Louisiana Economic Development Alliance, called him and said the timing was right to form the organization. The program would launch a year later.
McGinley, who worked at the California Institute of Technology through the 1980s and 90s, said Angels of Southwest Louisiana is a replica of a program offered in Silicon Valley and the Massachusetts Institute of Technology.
“If you look back 20-30 years, you’re going to find there were two vibrant, strong start-up communities in the country — east coast and west coast — around MIT in New York and Stanford University in Silicon Valley. That was it,” he said. “If you wanted to get something done, you almost had to get involved in those climates.”
McGinley said he brought his know-how and experience to organizers here, told them what he liked and disliked about the model and what he thought would work in Southwest Louisiana.
“A story that illustrates how far we’ve come is Yahoo,” McGinley said. “Some of the founders of Yahoo are from here; I met them at Cal Tech around 1982 at a time when the computer industry was very much fledging.”
McGinley said the Yahoo team wanted to make their way to Silicon Valley to build on their expertise around like-minded people with similar talents in an area with feeders, investors and major entrepreneurial support.
“Well, they did and they were successful,” he said.
He said the idea that a business launched today could only be successful if it were to come out of New York or California is simply not true.
“There’s more start-up communities around the country today and they’ve really blossomed in the last 20-30 years,” he said. “If you look around the country there’s many, many start-up communities that are thriving and that’s what we’re trying to do here.”
He said Angel Investors fund, mentor, coach and connect promising businesses with the people they need to succeed.
“We’re seeing up to $30 billion a year of private monies by private individual-accredited investors going into start-up, early-stage businesses,” he said. “Across the country, 90,000 businesses are being started each year with that kind of funding.”
In 2016, $26 billion was invested in start-up businesses across the country by Angel Investors, he said. McGinley said in mid-America and the South, about $125,000-$250,000 is typically invested in start-up companies.
McGinley said Angels of Southwest Louisiana has invested about $500,000 so far in four start-up businesses locally.
“More and more you find folks who have ideas and they’re looking for the right niche and the right market to make it happen,” said board member Mitchell Adrian, provost and vice president for Academic Affairs and Enrollment Management at McNeese State University.
McGinley said the local organization looks for business ideas with high-impact, high-growth potential to invest in.
“We help each other, we work with each other, we compliment each other, we’re accessible,” he said. “With the funding possibilities, and the coaching, mentoring and contacts we can provide, we can be very helpful.”
McGinley said those with business ideas can apply on the Angels of Southwest Louisiana website.
“We have hundreds of ventures in our website that we screen and of those it’s a very small percentage that we find attractive and of those we find attractive it’s a very small percentage that end up presenting their pitch to our board,” he said. “To date we have something like 345 business ventures and in that time frame we’ve presented only a dozen of them. Of all the ventures that present to an Angel group, only one or two percent get funded.”
Adrian said the group mentors applicants even if it doesn’t invest.
“During our due diligence process, if they can’t answer all of our questions they just might not be ready,” Adrian said. “But we’ll work with them, sometimes for a year, to help them along.”
There are seven people on the Angels board now; McGinley’s goal is at least 25.
“The reason for that is you need people participating, you need mentors and coaches and you need people who can do the due diligence process, and you don’t want to burn out the same three or four people every time,” he said. “We need more.”
Adrian said the board is like “Shark Tank” in some ways, but without the guarantee of funds the show’s stars can offer.
“You come in and it’s a very collegial group of folks who watch the presentation, score the presentation, it goes to due diligence and in that process we determine if we’re in or out,” Adrian said. “We judge the business model and let the idea work itself out in the market.”
“We do a much more casual approach than ‘Shark Tank’; we don’t put that kind of pressure on them,” McGinley said. “We do everything we can to encourage them, to nurture them, give them positive feedback. We don’t sharp shoot them; we’re not harsh in anyway.”
McGinley said start-ups are not likely to get access to some of the bigger investors in the region, but they can get access to Angels.