Angel Investing in Arizona
Seminar at Grand Canyon University provided useful information
Jake Heisler, Research Analyst
An Angel Investment Seminar was hosted by Grand Canyon University and their Canyon Angel program earlier this month, which introduced people to angel investing and the opportunities that it brings. Tim Kelley, the director of the Canyon Angel Program, introduced the event and described to attendees what an angel investor is: An accredited investor that provides capital for a start-up company in return for equity or convertible debt. Tim explained that there is a growing market of startups in Arizona, and investors are continually being sought out to help get those companies off the ground and grow. A representative of the Arizona Commerce Authority was present and spoke about how angel investing is a priority of the Governor’s Office. Tax incentives for angel investing have been established in Arizona as a result of this.
The seminar included a Q & A session with a panel of angel investor participants from companies scattered throughout Arizona, and moderated by the director of Tallwave Capital, a venture capital firm located in Scottsdale, Arizona. The participants answered various questions about the review processes for potential investments, the interview process, and what these firms do to help the startups/entrepreneurs succeed. We learned that around 60 percent of investments do not return the initial investment, and only 10 percent of investments make a large portion of total returns. Investors should not expect capital return for at least ten years, and it is surprising if it occurs before. The goal is to have a successful exit from the investment through the sale of the company to another entity like a public company, private equity firm, or with a public offering. Angel investors look to identify entrepreneurs who have this vision for their companies, but it is a rare quality to find.
Another important point to consider is diversification of investments. It is crucial to spread a wide net when investing to ensure your investments are not concentrated. A critical consideration is that investing in these companies requires time and dedication, and it is essential to put in the work to assure the investment succeeds. So, if a client invests in a start-up without the help of an angel investment firm, the client will have to be involved in the operation of the investment and closely monitor the management team’s decisions.
Takeway: The seminar was an informative and enlightening event that laid the groundwork for educating people about angel investing. Grand Canyon University plans to offer more business events in the future, and it will be beneficial to keep an eye out for investment or networking opportunities. Desert Angels and Tallwave stood out as being the most sophisticated of the firms, and Tim Kelley of Canyon Angels expertly provided an overview. Canyon Angels is just getting started with their efforts, and with the growing strength of the GCU alumni network, it will be interesting to follow their progress.
Jake Heisler, Research Analyst
Jake Heisler conducts investment due diligence, asset allocation strategies, portfolio reviews, and acts as a backup trader for Versant Capital Management.