Angel Investing and Economic Development

June 2014

Presented to: VCEN 2014 Conference

Yes, Virginia…there is such a thing!

VCC has built its reputation on…

Financing affordable housing projects

Funding community development ventures

Delivering technical assistance to small businesses in underserved markets

2

How did we do it?

1. Leveraging government guaranty programs

2. Partnering with private foundations and corporations for grant funding and capital investment

3. Launching new loan products tailored for VCC’s target markets and delivering technical assistance for borrower capacity building

3

VCC’s Vision as we expand our brand

To be the first choice for innovative capital and collaborative leadership promoting vibrant local

communities and enhanced quality of life.

4

Innovative capital: What is angel investing and why angel funds?

Accredited investors invest growth capital in start-up and early stage companies in exchange for (most often) an equity percentage and expected ROI

After “friends and family”, but before venture/institutional capital

Individual angels are often successful entrepreneurs themselves

Angel funds vs. angel networks/groups Operational efficiency As early stage funding moves upstream, more funding power Easier syndication on deals “Side-car” investing amplifies impact to small business

5

Collaborative leadership: VCC as Administrator of regional angel

funds Appalachian Regional Commission

Federal-state partnership promoting economic and community development across the Appalachian region

Appalachian Capital Policy and Angel Capital Fund

RAIN Source Capital Contracted by ARC to provide T.A. to VCC Industry leader in guiding rural communities through angel fund creation

and capitalization

Three Phases Feasibility and design Fundraising First Organizational Meeting

6

Leveraging partners Entrepreneurs

Serial In-residence/fledgling

Angel investors Individual Corporations/Institutions

Economic development officials Local Regional

Service providers Professional (lawyers, accountants, bankers) Technical Assistance (SBDC, SCORE, etc.)

7

Leveraging capital Typically $1MM - $4MM in committed capital

Smaller group of accredited investors (20 - 25)

More formalized in structure Operating agreement Code of conduct Committees (due diligence, screening, monitoring)

Administered (vs. managed) by a third party (e.g. VCC)

All investment decisions are made by the investor members (not fund administrator), usually majority rules

8

Thank you!Questions/Comments

9