By Sherri Buri McDonald
The Register-Guard, Eugene, Ore.
Angel investing — matching individuals with money to startups that need cash to grow — is undergoing a transformation.
“Online platforms are coming on like a freight train,” said Jamie McIntyre, a Maryland-based investor who recently used online angel investing platform CircleUp to invest an undisclosed amount in Eugene-based Good Clean Love.
These platforms didn’t even exist until 2013, he said.
Congress passed the JOBS (Jumpstart Our Business Startups) Act in 2012, easing federal securities regulation and enabling entrepreneurs to raise money through a variety of online crowdfunding platforms. Web sites or brokers that sell these shares must be registered with the federal Securities and Exchange Commission.
Traditionally, angel investors used their business and community connections to learn about potential deals. More recently, angel conferences, such as the Willamette Angel Conference in Eugene and Corvallis, let entrepreneurs pitch ideas to investors, who pool their money to put in a winning company.
McIntyre is such a believer in online investing that he has invested in SeedInvest, an equity crowdfunding platform launched last year.
“I’m trying to figure out a way to bring these online platforms to financial advisers and trying to have financial advisers be part of the overall process,” he said.
The online method offers advantages for all sides, he said.
“Just the ease of use to execute a deal,” McIntyre said. “It used to take a ton of time and lots of legal review,” he said, adding that with online deals, investors should still have their lawyers look at the documents.
Online platforms should help simplify how entrepreneurs make their fundraising pitches, he said.
“When a startup goes into fundraising mode, it’s like their whole business stops because they have to give the spiel again and again,” McIntyre said. As online platforms mature, “it will be 80 percent easier than it would be to do the traditional way.”
Not everyone is so eager about online investing platforms.
“In theory, it’s a good idea,” said Skip Rung, managing member of Willamette Angel Conference 2015 LLC. “But it’s got a lot of problems.”
WAC LLC researches each startup that wants to raise funds, calls their customers and meets with the startup’s leaders, he said.
“This is not something like people putting their money on a roulette wheel,” Rung said. “It (requires) quite a bit of homework.”
Joe Maruschak, executive director of the Regional Accelerator and Innovation Network accelerator in Eugene, said angel investor groups, whether local or online, need to mentor the startups they pick.
Maruschak said it’s too early to tell whether online investment platforms will help or hurt.
“It’s sort of a like a double-edged sword,” he said. “We’re going to see a lot more successes because there will be access to capital, and we’ll see a lot more companies that probably should have closed down sooner having access to capital, allowing them to survive when they shouldn’t survive.”
