Angel investment group off to flying start

Founders of HALO Capital Group would have been satisfied in their first year to invest $2 million in promising Indiana companies.
They instead quadrupled the amount—even while dealing in a sour economic climate.

The network of angel investors organized in the summer of 2007 but didn’t begin investing until the following May. Its members
last month committed $1.2 million to BidPal, an Indianapolis developer of wireless remote bidding technology for silent auctions.

Other local ventures receiving funding include Cine-tal, Compendium Blogware, EndGenitor Therapeutics Inc., Oxygen Education
and WebLink International Inc.

To be so prolific in a teetering economy speaks volumes about the investing clout HALO has amassed, said David Millard, chairman
of Barnes & Thornburg LLP’s business department. Millard helped create an angel network called AngelNet nearly a decade ago
that’s no longer active.

"It’s a big all-star group with a lot of marquee names," he said of HALO.

Indeed, HALO’s roster of 20 investors is stocked with former or current executives with the battle scars to merit their mentor
status. Besides providing capital, they bring a wealth of entrepreneurial experience.

Scott Webber has dirtied his hands in several startups and is BidPal’s CEO, for instance. Other notable HALO members include
IT veterans Mark Hill and David Becker. Both sold their own banking software firms, Baker-Hill Inc. and re: Member Data Services,
respectively.

HALO members are not obligated to invest in every prospect, but instead choose on an individual basis which companies they
want to support.

"These are people who are building businesses," Hill said of the HALO members. "They’re not professional investors."

HALO stands for Hoosier Angels Looking for Opportunities. It and other angel investors typically bridge the gap between initial
funding from friends and family and venture capital funding obtained later. Because most of the companies are in their infancies,
the investments are considered particularly risky.

Nationally, angels last year invested $19.2 billion in 55,480 companies, down 26 percent from 2007, according to the Center
for Venture Research at the University of New Hampshire.

Early-stage infusions typically take at least a few years to bear fruit, so the jury is still out on investments made by HALO
members. But Hill said he is satisfied with their decisions and noted that none of the six companies have folded.

Compendium Blogware, in particular, has been on a tear. The 2-year-old tech startup that helps companies start blogs has launched
its first out-of-state sales force and signed on 70 new customers in the fourth quarter of last year. The company has 40 employees.

CEO Chris Baggott appreciates the additional advice he’s received from investors, although he’s no novice entrepreneur. Baggott
co-founded the local e-mail marketing firm ExactTarget in 2000. Its annual revenue is now estimated at more than $48 million.

"I’ve been down this road before," Baggott said, "but it’s always nice to bounce something off of somebody."

To become an angel investor, an individual simply must show the Securities and Exchange Commission he or she has a net worth
of at least $1 million, or compensation of at least $200,000 annually for the last two years.

Angels increasingly are banding together, though, to pool investment funds and mitigate risk. More than 300 active angel networks
are registered with the Lexena, Kan.-based Angel Capital Association.

Locally, a group of 30-something professionals recently formed Gravity Ventures LLC. And three entrepreneurs from the medical
and software sectors founded membership-based Stepstone Angels.

High profiles can be drawbacks for HALO members, or any angel investor for that matter, Millard said. "Once that happens,
their voice mail and e-mail fills up, and every dog and cat is banging on their door."

That may be why many HALO members choose to remain anonymous. Local technology initiative TechPoint manages the group and
serves as the first point of contact for the public.

The state’s technology initiative fields roughly 15 to 20 applications every few months. Two companies are invited to pitch
their business plans at HALO meetings held six times a year.

The six companies receiving investments were winnowed from 12 that presented plans. Those investments ranged from $250,000
to $2 million. For BidPal, the $1.2 million investment it received in April was the startup’s second infusion from HALO.

"While the money is important, we believe that the talent that comes with the money is even more important," TechPoint CEO
Jim Jay said.

HALO has endured a bit of turnover. A few founding members have exited the group, but other investors have stepped in to take
their places. The aim is to keep membership at about 20, and to provide that critical hands-on training.

"Oftentimes, entrepreneurs think about the money," Hill said. "The important ingredient that HALO adds is experience. That
has lots of value." 

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}