The Ohio angel investing community boasts some of the United States’ largest and most active funds, according to VentureOhio and Columbus 2020. In fact, Columbus-based Ohio TechAngel Funds is the largest angel investor group in the country, supporting early stage information technology, advanced materials and medical technology companies.
Angels, who must be accredited investors (a minimum net worth of $1 million or a current and expected annual income of $200,000), invest in small startups or entrepreneurs. The provided capital may be a one-time investment or ongoing injections of money. Angels also invest in exchange for ownership equity or convertible debt.
Early stage financing, like angel investing, is critical to the success of high-growth startups, which are abundant in Central Ohio. Forbes has reported that Columbus is now the top metro area for scaling young companies.
Carol Clark, an experienced entrepreneur and software developer, co-founded Mindleaders Inc. in 1981; the e-learning and organizational development company was acquired in 2007. She also co-founded the X Squared Angels Group, which focuses on investing in women-led companies with diverse management teams.
She became an angel investor about 10 years ago, admittedly knowing very little about looking at a company strictly from an investor’s standpoint — except what she had learned from the investors in her own company.
Today, Clark uses a weighted checklist that explains the components of evaluating companies seeking investment money from angel groups. She usually requires a score of 70 percent to continue pursuing information about a specific company.
Management team — 20 percent
What skills are on this team? What skills are missing? Is this a team or a single individual?
Market size larger than $500 million — 15 percent
A rough estimate is that a company can hope for 1 percent of a market. If this company could only grow to $5 million, is this large enough for a sale?
Unique selling proposition of the product — 10 percent
Is this product different from everything else out there in its market? Is that a good thing?
Current revenues — 10 percent
Does this company have current paying customers?
Sales/marketing strategy — 10 percent
Is there a reasonable strategy around sales, marketing and pricing?
Competition — 5 percent
Who are the competitors? What and how are they selling? How large are they? Are they profitable?
Scalable — 5 percent
Can this company increase its business substantially and remain/become profitable?
Exit opportunities — 5 percent
Who will buy this company? How large does this company need to be before another will buy it, and how long will that take?
Accuracy of finances — 5 percent
Does the CEO understand the numbers?
Quality of capital access plan — 5 percent
How much more money will this company require before it is either profitable or acquired?
Other — 5 percent
Are there other attributes that I should consider?
Total 100 percent
For aspiring entrepreneurs who can pass muster, there are many opportunities to connect with a large, experienced group of angels who are committed to investing in Ohio’s economic future.
Carol Clark is a former president of WELD and a 2008 Women WELDing the Way® calendar honoree.
Becky S. Cornett is a member of the WELD Impact Committee. Barb Smoot is the president and CEO of WELD. Women for Economic and Leadership Development desires to increase the number of women in business and government leadership in Central Ohio.
