FINANCE
18A • August 2014 • NorthAtlantaBusinessPost.com
Start-up cash can come from unexpected places Entrepreneurs find ‘Angels’ willing to take them under wings By PAT FOX pat@appenmediagroup.com ATLANTA — While the climate for new start-ups remains tricky, some entrepreneurs are enjoying another path to valuable capital outside of the traditional route through banks. Over the past 19 years, some 383 young startups have gotten help from Gathering of Angels, an Atlanta-based firm focused on finding tomorrow’s success stories. The company has raised $20 million since 1996 and channeled it to young businesses hungry for a chance to get established. Tarby Bryant, founder and president of the company, said Gathering of Angels, unlike many other venture capital firms, does not narrow its focus to one or two industries. Any good idea can draw Angel investors, he said. The group has helped bankrolled young companies like Georgia-based Zirus, which pioneers drug research, KidzToys in Atlanta and Storm Shelter Technologies, a Savannah-based lightning detection company. “Most of the people that come before the Gathering of Angels are not capable of going to a bank, even though they would like to, because it is in fact the cheapest source of capital,” Bryant said. “But most of them don’t meet the requirements: a three-year operating history, or the collateral to back up a bank loan.” Studies by the Ewing Kauffman Foundation show that, while employment has been growing, new businesses are on the decline in the United States. Its latest Index of New Entrepreneurs shows that approximately 476,000 new businesses were launched in 2013, down from 514,000 the year before. Both figures are well below the high of 565,000 businesses founded in 2010. Angels investors are accredited wealthy people who write checks. Some are doctors. A few are bankers. Most are active or retired businessmen and businesswoman who are looking for something exciting to invest in. Bryant began the enterprise in 1996 while working for a nonprofit technology venture corporation in Santa Fe. He moved the operation to Georgia, where he grew up, in 2010. Gathering of Angels meets once a month at the Alpharetta Marriot or at Atlanta’s Georgian Club to hear presentations by entrepreneurs. The atmosphere is formal, with fine wine and a light meal. Entrepreneurs pay a $2,500 fee for the opportunity to present their business model before the gathering of 30-50 investors. Each presenter has 20 minutes to ex-
Tarby Bryant addresses a crowd of investors at a Gateway of Angels meeting. plain his or her proposal in PowerPoint, then conclude with a brief Q&A with the audience. The fees are Bryant’s cash flow. They pay for the evening, the wine, the food, the room and marketing. Each presenter is required to appear the afternoon of the meeting for a rehearsal. “I review and approve and sometimes perform major surgery on their presentations,” Bryant said. “I’m like a Marine drill sergeant.” He said he’s had companies show up, pay the fee and refuse to practice. One
entrepreneur from Cleveland flew in, put his materials out and refused to go through the rehearsal. “I said ‘If you don’t practice, you don’t present,’” Bryant said. “He packed up his stuff and went home.” At the formal meeting, each investor is required to fill out evaluation sheets on each presenter. They are also obliged, at some point, to write a check. “People who come to my meetings are serious about looking for an investment, and if they don’t write a check in a certain time period, I take them off the list,” Bryant said.
Birth of an ‘Angel’ investor
Tarby Bryant saw a good idea and ran with it. While helping organize an annual equity capital symposium in New Mexico back in 1995, the former Atlantan noticed something strange. “I realized quickly that entrepreneurs would die between May of one year and May of the next year,” he said. “If BRYANT they missed the cut and couldn’t present, they died or left.” The notion struck him: “Something on a monthly basis would be a lot more productive for the young companies looking for money.” By chance, Bryant read an article that summer in Forbes Magazine about Band of Angels, a group of Silicon Valley investors who targeted young companies for capital assistance. Not long after, he met with the group’s founder, Hans Severiens, at a conference in Los Alamos. “I concluded this was a smart guy because he had a PhD in nuclear chemistry, and maybe I could pour the wine like he did and have meetings,” Bryant recalled. I told him that’s what we need to be doing in New Mexico if we’re going to keep these young companies that were coming out of the laboratories and leaving the state.” Bryant went home and had a bottle of wine before coming up with the name Gathering of Angels. Because he taught finance four nights a week, Bryant held his first meetings on Saturday mornings, serving muffins, coffee, orange juice and fresh fruit. Young companies would fill the morning with presentations in hopes of landing muchneeded capital. “Two or three months later, when I had received no funding, I called (Severiens) back in California and asked him what I was doing wrong,” Bryant said. “He asked me what kind of wine are you serving? I said, well you
Investors are recruited usually through referrals from accountants, lawyers or friends. Investment bankers and venture capitalists come to the meetings complimentary. Though Bryant is the sole operator, he has a lot of help. A friend from Kennesaw State University supplies students to help out with the meetings. Other friends sit in and help critique the afternoon rehearsals. Still, Bryant checks every detail. “I’m the owner 100 percent,” he said. “I review every executive summary, business plan or Power Point that comes in.”
can’t serve wine for breakfast.” “’Tarby, people don’t write checks at breakfast. They only write checks at dinner,’” Severiens responded. So Bryant stopped teaching at night and started holding meetings at night. The change made all the difference. Bryant’s background served him well. Born in Durham, N.C., he moved to Atlanta when he was 5. He received his BA in economics from Davidson College in 1964, then served as an Army Intelligence officer, with a 1966 tour of duty in Vietnam. Upon his return, he attended Georgia State University, where he earned his MBA with high honors in 1969. He became immersed in the Atlanta business community, becoming a managing partner for a real estate merchant banking firm. But it was his volunteer work with the Atlanta Jaycees that put him on a new course. It was there he ran into then vice-mayor Maynard Jackson. Within a short time, Jackson thought enough of the young businessman to select him as co-chair of his campaign finance committee in his successful bid for mayor in 1973. “I served a year in Maynard’s administration, bringing blacks and white together in the community relations commission, then went back into private business,” Bryant said. In 1975, Bryant began buying hotels, becoming involved in the pre-development, marketing, acquisition and management of the properties. He moved with his wife, Leslie, to Santa Fe in 1991, where he remained until her death in 2012. He now runs Gathering of Angels from his home in Jasper, where he enjoys the quiet. “I love what I’m doing and I hope I can do it till I check out,” he said. “I haven’t done a hotel in while, but Gathering of Angels is pure excitement for me.”