A new Baltimore investor syndicate is giving startups the opportunity to receive money and advice from hundreds of angel investors.
Riptide Ventures founder Michael Leffer plans for the angel investors he works with to invest $30 million in 35 companies over the next three years after officially spinning out the firm from Early Light Ventures in early September.
The company is not a traditional venture fund, but rather an entity that helps connect businesses with angel investors. Riptide already works with 450 different angel investors, who have invested $10 million in 12 companies in the past year while Riptide was incubated inside of Baltimore-based Early Light, he added.
Last year, Riptide looked at over 4,000 different companies before choosing 12 to invest in, Leffer said. He said he looks for companies whose founders are solving specific problems that consumers are facing as well as products that have a large potential market, rather than catering to a specific niche. The team, which is made up of two venture partners and four venture fellows, also looks for a well-rounded company, with a blend of technical expertise and marketing skills.
Unlike Early Light, whose fund focuses on business-to-business companies that already have revenue, Leffer said Riptide focuses on early stage pre-seed and seed startups. Leffer helps angels invest in a wide range of companies from consumer-focused businesses like the dog park and bar concept Bark Social, to health care companies and business-to-business firms.
Riptide also has a smaller minimum check size than Early Light. The company is able to work with accredited investors interested in checks of around $10,000. Leffer is especially proud of attracting many first-time investors. Angel investors with real world experience can often provide important guidance to young companies in a way that can often be difficult to get from the individual limited partners in a venture capital fund.
"An executive at a company or a lawyer or an accountant can actually be helpful to a startup,” Leffer said. “If they're invested in a fund, they have an intermediary that prevents direct relationships.”
The new investing syndicate is being created at a time of decreasing venture capital investment across the country as the stock market declines. Early stage companies are somewhat insulated from the downturn, Leffer said, since they do not require the giant checks and incredibly high net-worth individuals of more mature firms. However, in general, venture capital funds and angel investors are cutting back, since personal assets are down.
On the other hand, company valuations are smaller, so investors can get a larger amount of equity in a company for a smaller amount of money than in better economic times. Baltimore has seen several other venture capital firms raise money this year, including Mac Conwell's RareBreed Ventures and Jeff Cherry's Conscious Venture Partners.
