Angels want their investments close at hand
Published Tuesday November 11th, 2008
Venture capital Balancing act needed to break into U.S. market.
BOSTON - With the networking complete and the last of the business cards exchanged, a busload of New Brunswick business owners has returned from a capital-seeking trip south of the border.
But as the companies now look to capitalize on their new-found contacts and tips for entering the U.S. market, the head of a large angels' investment organization says New Brunswick businesses face a major hurdle in gaining American investment dollars: geography.
According to Christopher Sheehan, managing director of the Boston-based Common Angels group, angel investors are mainly focused on early-stage companies - meaning they want their investments close at hand.
In addition to capital, financial angels offer advice, coaching and mentoring, which makes local companies a better fit for investment, Sheehan said.
Partnering with a remote company means fewer face-to-face meetings and less direct assistance.
"That's going to be the biggest challenge because the focus of angels is on that early stage," said Sheehan, whose group is comprised of 72 former entrepreneurs and is focused mainly on the IT sector in the Boston area.
"That's where the balancing act is. Whether they can overcome the geographic challenge depends on how good the entrepreneur is and how compelling the investment opportunity is - because naturally I will probably gravitate to my own backyard."
Sheehan, who began his investment career in Australia, was among a number of angels who spoke to the dozen New Brunswick companies that visited Boston last week.
Like his fellow investors, he offered tips for breaking into the U.S. market and for securing investment from angel groups and venture capitalists.
In an interview, Sheehan said most angel groups pursue investments in the IT, health care, energy and green technology fields.
He said he was impressed with some of the New Brunswick entrepreneurs in those sectors.
"I think the potential is real," he said of the local delegation. "It all starts with the entrepreneur. And it seemed like there are some good entrepreneurs in that room.
"It's just a matter of connecting with the right set of investors."
Sharon Cunningham, president and founder of Screen Devices Canada Inc., is trying to do just that.
Her start-up is focused on devices that rapidly screen for medical conditions. The company's first product, Thyroid Chek, acts like a pregnancy test in instantly revealing hyper-Thyroidism, which is caused by elevated levels of Thyroid hormones. The disorder can lead to fatigue, diarrhea and skin and hair changes.
Cunningham's product is already used by some doctors in the U.S., but she reckons the firm has only tapped one per cent of the potential market.
Thyroid Chek only requires a single drop of blood for the test, meaning patients can be tested immediately - instead of being sent for lab testing.
The result is quicker diagnosis and treatment, and savings in health care dollars.
According to Cunningham, the American market is huge. She said there are an estimated 27 million people in the U.S. with undiagnosed Thyroid disease.
So she hopes her firm, based in Hatfield Point north of Hampton, can help fill that void. And while she has received some funding from U.S. backers - and from a Halifax-based angels network - she is looking for more.
The trip to Boston, she said, helped her refine her business plan and pitch.
"It was really, really worth my while. I'll probably tweak a few things - that's for sure," she said on the bus ride back to New Brunswick. "I know I have a good story to tell."
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