Growing the local investor pie: new angel club
By Drew Tulchin -For the Journal
New Mexico’s economy is booming, especially for early-stage and high-growth local companies. Our startup ecosystem is solid. There are exciting announcements weekly of investment rounds closed, new customers signed up, senior hires made and partnerships established.
Thanks to the many great organizations working daily with the mutual goal of building our startup economy: University of New Mexico’s Rainforest, New Mexico State University’s Arrowhead, CNM Ingenuity, New Mexico Tech, Los Alamos National Laboratories’ Feynman Center, Q Station, New Space Nexus and many others. This includes New Mexico Angels, a 21-year-old, membership based organization serving the startup scene with investment, education, networking opportunities and more. To keep fueling our startup and high-growth companies, it is helpful to have a thriving pool of investors eager to join early opportunities. These offerings are by definition high-risk — with a long road to financial return. National data shows 80% of new companies are not in business after five years. Angel investors are key to helping these early-stage companies thrive to beat the odds.
An “angel” is a person, household and/or family office with sufficient annual earnings or net worth of at least $1 million to qualify as “accredited.” Essentially, that they can afford to lose these investments without risking their family’s welfare or well-being. (Think 1920s stock market crash that led people to jump out of windows after losing everything).
An angel plays a vital role in supporting companies — often at their earliest stages — such as by writing their first check. Angels, in addition to cash, may have business and other expertise to assist a new entrepreneur on their journey. More angels in a community frequently correlates to more early money available with the goal of more checks written.
How does one become an angel so we can increase the number of investors? It is both complicated and easy. Anyone who qualifies as accredited can invest. The next challenge is to be close enough to startup and high-growth companies with investment offerings to know about them. Then, to know how to analyze them (conducting due diligence) to make a comfortable decision on investing.
The desired outcome is a return on one’s investment — making money. Standard strategy is to invest in several startup and high-growth companies to diversify. Thus, creating a personal portfolio that increases the chance for overall return.
To overcome what can appear daunting, New Mexico Angels is actively working to build the on-ramp. As part of its educational mission as a nonprofit organization, the New Angel Club starts in March and continues through April. It’s an interactive training to bring people together for unique access to learn about investing, how to analyze startup businesses, where to access “deals” and to collaborate as a group. Details are at https://nmangels.com/events/.
The more we all work in the New Mexico business community to grow the overall pie — that is, bring in new investors — the more thriving our local economy becomes.
Angel investments are overwhelmingly local affairs — you support your neighbor.
The companies use that capital to hire here and grow in our state. This is not a case where a new angel enters the market means someone else loses. On the contrary, the more people who join in, the more our economy and local community wins.
Drew Tulchin serves as President of New Mexico Angels, Managing Partner of the New Mexico Vintage Funds, and is Founder of UpSpring Associates. He is Zia New Mexico Proud
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