The Hudson Valley Startup Fund is preparing to raise money from investors for its third fund.
HVSF is an angel investment fund focused on startups that have some connection to the Hudson Valley, defined by the organization as north of New York City up through the Capital Region.
“We anticipate raising a larger fund to be able to have greater impact on the area because we see an increase in demand for capital,” said Leon Greene, managing partner for Rhinebeck-based HVSF. The firm's two prior funds were $1 million each.
In particular, he said HVSF is focused on bridging the gap in between the earliest stages of angel funding – typically from friends and family – and institutional seed capital, when investors are typically looking for startups with measurable progress.
“In between those two stages is a year or two of scrapping for $10,000 or $20,000 checks from individual investors. That's an immense distraction for these companies. So we try to be that bridge,” Greene said.
“We're willing to take a little more risk and come in a little earlier than an institutional fund would come in, but we're going to write a bigger check, and we're going to syndicate those offerings to the angel community to be able to bring bigger capital to the table and hopefully get some of those companies over the hump to their institutional financing.”
HVSF has nearly 15 startups in its portfolio, including Simplecast, a Troy podcasting startup that was acquired in 2020 by SiriusXM. It’s a member-managed fund, meaning the organization’s leaders handle investment due diligence on behalf of its multiple investors.
The fund earlier this year made its largest-ever investment in Troy-based United Aircraft Technologies, leading a $1.3 million round of oversubscribed financing.
Meanwhile, the organization is looking for startups to deploy the remainder of its first funds. While many investments lately tend to be tech-related, Greene said the fund is open to startups in various industries, as long as they have the potential to scale up production.
But a word of advice to startups: Introduce yourself to potential investors at least six to 12 months before you anticipate being ready for capital.
“That is probably one of the most commonplace challenges that we have, is that folks don't show up until they need a check,” Greene said. “It takes time to get comfortable with an investment, with a team, with a concept, and do appropriate due diligence to understand the opportunity.”
