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Thursday, Nov 30, 2023

Valley Companies Rely on Angels As Local Funding Dearth Continues

Valley Companies Rely on Angels As Local Funding Dearth Continues By CARLOS MARTINEZ Staff Reporter Companies in the Tech 101 Corridor have long known how difficult it is to get venture capital funding. Even in the dot-com boom, venture funding was hard to come by for most. But today, angel investor groups have seemingly become the only game in town when it comes to funding. “It’s a difficult situation for companies seeking funding because they know things are stacked against them,” said Brent Reinke, a Westlake Village-based attorney with Crosby Heafey and organizer of the Gold Coast Venture Forum, a networking and investment group. Gold Coast and the newly established Keiretsu Forum are the only two angel investment groups in the area which focus primarily on local firms. “It’s unfortunate that there is little venture capital coming here, so groups like us have to step in,” Reinke said. Since it was founded in 1999 Reinke and Gold Coast have funded nearly a dozen companies with startup dollars. Having seen Reinke’s success in the Tech Corridor, Northern California investment banker Randy Williams started a local branch of his Silicon Valley-based Keiretsu Forum last February. Keiretsu comes from a Japanese term that means a network of businesses that own stakes in one another. Unlike an investment fund, Williams’ network has no fund manager and is made up of its membership committee and a company screening committee. “Each member invests his or her money and we merely provide the resources and assistance to make investment decisions,” Williams said. Founded in September 2000 in Northern California, its members have funded 22 companies with $20.8 million in funding in just the last two years. David Cremin, managing director of DFJ Frontier Fund, said angel funding has become critical to many startups in the area. “When you don’t have venture capital in an area like this, you have to look for angel financing,” he said. “This area has been underserved by venture capital.” The Tech Corridor, like the rest of the Valley and surrounding area has seen little venture capital even in the heyday of the dot-com boom when many tech startups made their home locally. But when the tech bubble burst, many potential investors pulled back from the area, Cremin said. The drop in venture capital has meant a greater role for angel investors who are generally veteran entrepreneurs hoping to fund the next “big” thing or simply give a hand to other entrepreneurs, Keiretsu’s Williams said. “We have a lot of startup companies interested in making a presentation to our group and it shows the need for investment capital,” he said. Keiretsu has so far funded one company when it raised nearly $1 million last June for EdenTree Technologies, a startup networking equipment maker based in Camarillo.

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