A Conversation With ... Jim Conley

What is Springfield Angel Network ?
A collaboration between the Springfield Area Chamber of Commerce, the Jordan Valley Innovation Center through Missouri State University and Drury University’s Edward Jones Center for Entrepreneurship & Innovation. The Springfield Angel Network’s primary function is to create an opportunity whereby (entrepreneurs) seeking funding can meet people who would be qualified potential investors. There’s no formal fund, and we’re not actively promoting any specific investments. The whole purpose is to create economic development in southwest Missouri.

What is angel investing?
(It’s) an opportunity for high-net-worth individuals to make alternate investment decisions in entrepreneurial activities and support those entrepreneurial activities. Folks who are getting started in business seldom have sufficient net worth or equity to pledge for traditional lending (and) have to go through several steps of financing. The most common place where people start is the three Fs – founders, family and friends. … At the other end of the spectrum are private equity and venture capital groups. … Typically, private equity groups are interested in the $10 million range and above. Because of the economy, some private equity groups are operating in the $5 million range. … There’s a void between what most family and friends are willing and able to fund, and what the private equity groups are able to fund, and that’s the gap where angel investors typically operate.

What do you do for the network?
My role with Springfield Angel Network is to be the point of contact for funding requests. The Network was started in 2008, and I was one of the founding angel investors. We had a pretty good start for nine months or a year, and then things kind of fizzled with the economy and there wasn’t a whole lot of activity. A year ago, we decided (to) crank this thing back up, now the economy is starting to heal. We’re gaining some traction (and) have doubled the number of participants in the Springfield Angel Network to about 25, and we’d still like to double it again. I’ve been asked that during the period of time that I’m serving (in this role), that I not actively participate as an angel.

What are the eligibility requirements for Angel Network participants?
The chamber takes the lead on recruiting angels. Even though we are not licensed to sell securities and are not selling securities, we are adhering to the (Securities and Exchange Commission) guidelines for accredited investors. Through the SEC’s eyes, an accredited investor is someone who has a net worth of at least $1 million, excluding the equity in their home, or has an annual income of $200,000, or a combined family income of $300,000 annually.

How does network participation work?
If you agree to become part of Springfield Angel Network, there is no obligation to invest. You’re made aware of presentations, and you pick and choose whether you want to be involved. You could go to 10 funding requests and not write a single check. … We’ve had more than 60 funding requests in the last year, and (since 2008), angel participants have successfully funded a handful of requests.

What do investors expect in return?
Most folks are looking for an equity stake. The average expectation is that there will be a tenfold increase in the value of a business. It has to be high return to offset high risk, because roughly only one in 10 that get funded do really well. Four or five just plain fail, so you lose your entire investment, and two or three do OK, so you maybe get your money back. Angel investors are looking for a 20 percent to 30 percent return.

What kinds of opportunities do you put in front of the angels?
If a business can’t grow exponentially within three to five years, it’s not going to yield the kind of return that’s going to attract angel money. … We are looking for a business plan that’s well-thought-out and well researched and believable. Sometimes folks make assumptions on business plans that you just can’t imagine. I also look at whether they are all in. … We’ve had folks who’ve come to us and have been putting their own money into an idea for months or years, and they’ve got their heart, soul and every single penny they can scrape together put into it. If someone has that level of buy-in for their business idea, that gets our attention.
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