The desire to work closely with entrepreneurs is a key piece of the post-investment equation.
There’s no doubt about it—being an entrepreneur can be a scary proposition. And one aspect that may be scarier than the rest is that of approaching investors to fund your endeavor. Perhaps the thought of approaching investors evokes images of the show Shark Tank, where both newbies and seasoned entrepreneurs walk down a seemingly lonely hallway, through a set of doors, and into a room with five investors worth billions of dollars poised to pick you apart and determine if they want to invest, and on what terms.
While Shark Tank may conjure up the thought of an adversarial relationship between investors and entrepreneurs, one can argue that such a relationship is staged to add dramatic effect to garner viewers and ratings. In reality, both investors and entrepreneurs are looking to succeed, and their interests are aligned in many respects. In the nearly five years that Central Illinois Angels (CIA) has been making investments, its desire to work closely and partner with entrepreneurs has continued to be a key piece of the post-investment equation.
Enhancing the Investment Role
To date, Central Illinois Angels has invested in three graduates of the Peoria NEXT Innovation Center: Endotronix, Inc.; Intellihot Green Technologies, Inc.; and Lumec Control Products, Inc. CIA has enjoyed a strong relationship with these companies, their founders and management teams, and has been able to contribute to their success in a variety of ways.
One thing that can be challenging for entrepreneurs is creating and working effectively with a board of directors. CIA has board representation with Endotronix, Intellihot and Lumec, and with this representation, it is able to enhance its investment role and contribute positively to the growth of each company. Effective boards can add tremendous value to the entrepreneur and management team, providing guidance to critical business decisions, introductions to key industry contacts that can accelerate the growth timeline, and even input in solving day-to-day issues that may arise.
“Our three-year relationship with the Central Illinois Angels has been a critical source of expertise and guidance,” says Paul Luebbers, founder and CTO of Lumec Control Products. “Their members have contributed much more than capital; they’ve been a great partner. Beyond the business contacts and knowledge they bring to the venture, they have helped us grow from a company that can develop a great technology, to a company that can sell product into the marketplace—and that is a very difficult transition.”
Recognizing the challenges faced by early-stage businesses is a key part of being an effective partner and not just a source of capital. “Every business, innovation and its product have a unique path to market,” says Sridhar Deivasigamani, founder and president of Intellihot. “One of the most crucial steps in that path is having an environment that supports the rapid transformation from concept to pre-commercialization. CIA understood the importance of that environment and supported Intellihot in rapidly traversing this phase.”
All three Innovation Center graduates have been required to raise multiple rounds of funding to accomplish their business objectives—a challenge that many angel-backed startups must deal with. CIA has not only participated in multiple rounds of funding for each company, but has also introduced the companies to other angel investors that have helped provide a critical investment syndicate. These syndicates not only provide additional funding, they can also provide additional contacts and guidance that may be invaluable to the company as it matures and begins to produce revenue.
“Central Illinois Angels has established itself as one of the premier angel investment groups in the Midwest,” says Harry Rowland, founder and CEO of Endotronix, “and they continue to broaden their network of entrepreneurs and investors. They are particularly a leading group when it comes to syndication, as their best-practice model provides entrepreneurs with a model to secure larger financings pre-venture capital.”
Central Illinois Angels takes pride in the resources they are able to bring to bear for the benefit of their portfolio companies, both financial and otherwise. This further strengthens the alignment of interest between those that provide capital and innovative entrepreneurs with a desire to commercialize their products. While it may not lessen that initial Shark Tank fear, entrepreneurs can rest assured they are engaging a true business partner with Central Illinois Angels. iBi