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Before entrepreneurs can find angels, they have to walk through the valley of death.
The so-called “valley of death” for a young startup is the period of incubation between the creation of a big idea and private-investor funding. Many companies die off in this period, usually because they don't have the resources to develop further.
A group of executives, economic development officials and academics from Collier, Lee and Sarasota counties recently launched Fusion Pointe and plan to raise $1.5 million to fund promising entrepreneurial ventures.
The nonprofit organization plans to provide $50,000 to $150,000 in capital to each promising entrepreneur in the form of convertible debt. That debt could be paid back early or converted to equity later, allowing Fusion Pointe to benefit from a sale and reinvest the money into more startups.
Fusion Pointe's mission is to provide capital and mentor assistance to prepare young companies for their first series of angel investment. It replaces the Gulf Coast Venture Forum, which found that companies it was considering for its investors weren't mature enough.
“It's very cooperative and collaborative with the angel fund,” says Tim Cartwright, partner at Fifth Avenue Advisors in Naples and chairman of the Tamiami Angel group of funds.
Once Fusion Pointe's program is underway later next year, it will prepare locally based companies for their first series of angel funding from funds such as the Tamiami Angel Fund. Cartwright says he's raising $4 million to $6 million for a second Tamiami fund after the first one closed to new investors.
Steve Walling, the chairman of Fusion Pointe and a Naples resident, says the organization is adopting a similar strategy used by JumpStart in Cleveland. Walling, a founding board member of JumpStart, says that group currently has invested $29 million in 78 companies in Northeast Ohio and has assisted another 450 ventures.
Walling says he and other Fusion Pointe board members plan to raise money from corporations, individuals, foundations and public-private economic development organizations. “Ohio has a very large fund that economic-development organizations like JumpStart use every year with matching funds,” says Walling, who formed consulting firm SJW Strategic Solutions after selling a company in Ohio that made liquid colors for the plastics industry.
Once it has raised $1 million to $1.5 million, companies may apply for funding by presenting a business plan. “Our focus is primarily those companies that have a high potential,” Walling says, noting that winning companies are likely to be in high-growth sectors such as technology.
Fusion Pointe would then provide encouragement, mentorship and assistance to develop a management team, create a product and demonstrate its success so that angel investors might be interested. “We prepare them for that next investor, the series A angel fund,” Walling says.
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