When the Howard County (Md.) Economic Development Authority’s NeoTech Incubator opened in May 2000, venture capital investments were already on the downswing. But while the VC market was imploding, the need for capital investment in start-up technology companies was not.
Eager to locate new sources of funding for technology clients, incubator officials investigated ways to make the most of its location in one of the country’s most affluent counties by encouraging angel investments by business and community leaders with disposable income.
Although angel investments typically are much smaller than venture capital investments, these early-stage funds are often what start-up technology companies need to spark their growth. Using an annual Mid-Atlantic Venture Association program as its guide, the incubator developed a plan to bring together local angel investors and incubator clients through a program designed to educate each group about the needs and expectations of the other. And thus, the Angels and Eggs program was born.
Culminating with a formal event in which selected incubator companies make presentations to the region’s angel community, the Angels and Eggs program is open to all Maryland incubator clients. In 2002, the first year of the program, approximately 120 companies were eligible. More than 25 percent of those companies applied.
"The NeoTech program only has 10 companies, so we invited other incubator companies in the state to participate," says Carol Morrison, manager of the NeoTech Incubator. "We wanted to get a critical mass of start-up companies involved because we thought investors would be more inclined to attend if there was a larger range of companies represented."
Judges from the region’s investment and business communities selected the most qualified applicants to make presentations, and business coaches helped the selected entrepreneurs perfect their pitches. The Angels and Eggs program also offered training for those who were not selected, including workshops on the needs of the angel investment community and presentation readiness boot camps.
Fifteen companies — eight information technology companies and seven biotechnology companies — from incubators throughout the state presented at the 2002 Angels and Eggs event at the Johns Hopkins Applied Physics Lab in October. The event attracted more than 50 angel investors, including many who were unfamiliar with the investment opportunities available with incubator clients.
The program received positive reviews from both the angel community and the incubator companies that participated. "This is a unique forum allowing companies like us to pitch to an audience of angels, which is the exact type of investor we need to reach," says Rita Sallam, vice president of finance at Business Devices Inc., a presenter at the October event. "The boot camp was extremely informative. I was able to glean key pieces of information that have significantly refined my presentation and my approach to angel investors."
The Angels and Eggs program has successfully achieved its ultimate goal: attracting early-stage investments in incubator clients. Since the October event, angels have invested more than $200,000 in participating companies, and talks between start-up businesses and potential investors continue. Through an aggressive outreach program to area angel networks, the program also helped raise awareness about Maryland’s business incubation community among investors.
The cooperation of Maryland’s business incubators and the support of community volunteers and sponsors were key to the program’s success, Morrison says. Although the NeoTech Incubator manages the Angels and Eggs program, its development was a joint venture of the Howard County Economic Development Authority, the Maryland Business Incubation Association, and the state’s business and educational communities. Local business and government sponsors financed the program, and volunteers contributed administrative, marketing and business counseling services.
Planning for the 2003 Angels and Eggs program began in April, and last year’s sponsors have already signed on to help. That doesn’t surprise Morrison. "We are constantly offering events to bring people into the incubator," she says. "Because we’re off the beaten track in Columbia, we have to be their destination for them to get here. Now that we have our momentum going, we have people calling us wanting to volunteer with the incubator and its programs."
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