Tuesday, October 15, 2013

Launch Angels, A VC Fund Built Around Equity Crowdfunding, Opens in Boston

A new early-stage venture capital firm with Angel in its title opens in Boston this week, Launch Angels, which intends to take advantage of equity crowdfunding, only approved by the SEC two weeks ago.  Launch Angels hopes to raise a series of $1 million funds from high net-worth individuals to invest in startup deals sourced from online  crowdfunding sites.

“We have two ways of working with existing angel groups,” says CEO Shereen Shermak.“They may take a stake in one of our funds as an LP (to the degree they are able), or the angel group may decide to brand the fund on our platform for themselves/their investors.

Launch Angels funds are geared toward investors who are seeking to invest about $100,000, but are looking for an easier way to diversify. "Most people don't have access to fund 10 quality deals," she said.

Shermak, who most recently co-founded local financial tech startup BuysideFX, previously was a VP at State Street and Fidelity. She is based at PayPal's StartTank startup incubator in Boston.

Launch Angels was founded by the consulting firm Big Idea Group of Bedford, N.H., whose founder, Michael Collins, serves as lead manager of Launch Angels. Two of Big Idea's executives, Beth Obermiller and James Gill, serve as managers for the firm.

The Launch Angels model is made possible by changes in regulations that allow equity crowdfunding — through sites such as MicroVentures — to market shares to accredited investors.

The firm this week put up its website, which features five potential deals Launch Angels is considering; among them are Twitter, which, via MicroVentures, Launch Angels has access to at a price of $19.93 a share for up to a $1.3 million total investment. Other companies which Launch Angels is currently looking at include Boston-based Freight Farms, which offers retrofitted shipping containers for growing vegetables, and Space Monkey, a Utah-based data storage startup whose backers include Polaris Partners.

Deals are sourced by Launch Angels' investment committee, whose members include Merchant Media founder Michael Antino, Royalty Capital Fund co-founder Arthur Fox,  and former longtime Teradyne executive George d'Arbeloff.

“The only thing I would say about the companies under consideration is that we have been running our Investment Committee meetings (to validate our methods) for about six months, and will consider companies historically identified for actual investment once the first fund closes. An added point is that we plan to have one of the funds focused on women-led and women-friendly businesses in 2014,” says Shermak.

Launch Angels aims to close its first $1 million fund by the end of the year,  then to close a new $1 million fund each quarter over the next few quarters. Launch Angels will have management fees and carry structure similar to VC firms, though fees will be more directly tied to costs.

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