Springfield Angel Network nixed for new approach

The Springfield Angel Network is history, and new programs designed to help fund budding entrepreneurs are on the way, according to business-development professionals with the Springfield Area Chamber of Commerce and The eFactory.

Area angel investors haven’t formally met to consider startup proposals in about a year. Launched in 2008 on the verge of the recession and with access to capital tightening, the effort fell flat with investors, entrepreneurs and the groups working to connect them.   

“With the people involved, it didn’t work because they didn’t have the appetite for investment,” said Springfield entrepreneur Jason Graf, co-owner of crowdfunding website CrowdIt.

“I think they were used to investing in manufacturing or hard products and not some of the more less-concrete startups in the tech field.”

In the roughly five years the Springfield Angel Network fielded investment pitches, those involved say roughly a dozen of the 100 requests secured angel backing.

“It was just a mismatch between what those particular investors were seeking versus the investment opportunities that were being presented to them,” said Graf, who never met with the angel group but had unsuccessfully pitched to an individual angel investor before securing venture capital dollars.

Organizers have said funding by angel investors is typically double the Springfield network’s rate.

“The gaps we’ve seen are with mentorship and guidance through the startup and growth process [and] access to early capital,” said Brian Kincaid, Missouri State University’s business incubator coordinator, who connects startups at The eFactory with potential investors. “Then, on the back end, can we continue to cultivate those relationships who might be interested in seeing those deals after they are to a certain point?”

With investors deemed too conservative and an influx of tech-savvy entrepreneurs, Springfield’s startup-investor scene is at a crossroads. Officials at The eFactory and chamber want to help spur different levels of funding assistance based on where entrepreneurs are in their development, and former angel investors are helping to guide that process.

“We are taking the mentality of start, grow and accelerate,” Kincaid said, noting an emphasis on programs to assist entrepreneurs through early-stage growth.

Organizers say the angel investors – whose names have long been kept private – have remained active through programs such as 1 Million Cups – a national initiative centered on connecting and educating entrepreneurs through weekly meetings – and through conversations with the chamber and MSU on how best to move forward.

“We are still in the early stages of getting this formulated,” said Ryan Mooney, the chamber’s senior vice president of economic development.

Kincaid said around the first of April, The eFactory would unveil details of the programs in development. One of those is tentatively called the Seed Capital Access Initiative.

“The goal with that is to provide an option for startups and growth companies that an independent investment board sees potential in,” Kincaid said.

Dubbed by Mooney as the Idea Ecosystem, the efforts are inspired by the downtown IDEA Commons area, which is designed to support innovation, design, entrepreneurship and the arts.

“It’s designed to get companies from an idea that is well formulated to something that is fundable for investors or by banks,” Mooney said, declining to name investors helping to shape future program offerings in the absence of formalized angel investors.

“We realized that the Springfield Angel Network was not the right tool and that there are other best practices out there that we can model.”

In the past year, representatives of The eFactory and chamber have visited business-development centers in Kansas City, St. Louis, northwest Arkansas and Tulsa, Okla.

Also helping to develop programming is new eFactory employee Rachel Anderson. Anderson – the daughter of Jim Anderson, long-time chamber president and CEO – was added to the business incubator’s staff last month as an entrepreneurial specialist. As a co-founder of tech startup Alumni Spaces with fellow University of Missouri graduates, Anderson is familiar with the plight of entrepreneurs, Kincaid said.

The network started as a collaborative effort between MSU, Drury University and the chamber. As assistance for entrepreneurs from MSU, in particular, increased, Kincaid said oversight of the program had to change.

Kincaid and Mooney said their roles in recent years, and moving forward, is to connect investors with entrepreneurs, not to guide the frequency of investments.

“What we have been working on is trying to figure out what these companies need and what tools we have available in Springfield to assist them,” Mooney said.

Graf said equity investors are key elements in a blossoming entrepreneurial environment taking root at The eFactory. He said the plan to switch things up seems like a good one.

“I don’t know that a structured angel network is necessary, but access to the groups that are making investments is absolutely necessary for entrepreneurs, startups and our economy,” Graf said.

Last month, Graf announced he and business partner Paul Freeman of JP Advisors LLC teamed up with private equity firm Westward Alliance LLC and BYOPizza founder Michael Felts to create BYOP Corporate LLC. BYOPizza is a restaurant concept that launched in the Wilhoit Plaza at the end of 2013 before closing late last year for renovation and expansion. BYOP Corporate also is owned, in part, by BYOP Franchising LLC, a company formed by Felts, former Dallas Cowboys player Daniel Loper, country music singer Jerrod Niemann and songwriter Richie Brown. Together, they are working to franchise their brand across the country.

With local investors such as Westward Alliance – Ryan O’Reilly’s firm that recently purchased an 80 percent share in the Aviary Cafe and Creperie LLC – getting involved in startup concepts, Graf said other entrepreneurs could realize their business dreams. That activity is bubbling to the surface.

Kincaid said The eFactory is now home to more than 30 tenants.

“I think the eFactory has and is making every appropriate move it needs to make to empower entrepreneurs and startups in the community and make them successful,” Graf said.

“It’s an amazing thing to see what has been built in culture and community at The eFactory in less than two years.”