In a little more than a year since launching, the Brown Angel Group (BAG), which provides capital and guidance to entrepreneurs who have graduated from Brown University, is quickly making an impact.
The group announced the first three companies it plans to invest in and also introduced a new rolling fund called 401 Ventures to further support Brown founders. BAG had previously disclosed that it intended to invest $500,000 in March, but the recipients weren’t clear until now.
The group will invest $325,000 in an indoor farming robot company called Root AI, $130,000 in the alcoholic kombucha company Jiant and $110,000 in the online mental health prescription renewal company Minded.
“We are excited to be bringing structure, financial capacity and momentum to the Brown University entrepreneurial community,” Rajiv Kumar, co-founder of the Brown Angel Group and president and chief medical officer at Virgin Pulse, told Rhode Island Inno. “Brown Angel Group serves as a bridge to connect early-stage Brown startups with Brown alumni investors, and we expect to help fund hundreds of Brown-founded companies in the coming years.”
The funds were invested through three special purpose vehicles (SPVs), which allow BAG to pool capital from members of the group into a single LLC and invest in the company as a single entity.
To find the three companies, Kumar and BAG co-founder Mathew Farkash first screened many companies in order to identify the best opportunities for BAG members, which now total more than 600 people from all over the world.
By protocol, BAG surveys members to gauge interest in a particular company. If enough members express interest, a due diligence process is organized, and once complete, members can choose if they want to invest and how much.
Kumar said the SPVs make the investing process easier for entrepreneurs because they don’t have to manage multiple investors or due diligence processes, so they end up with less complicated capitalization tables. The SPVs also allow members of BAG to invest as little as $5,000 in an SPV. The typical floor for an individual investment is $25,000.
While Root AI, Jiant and Minded are the first three companies BAG has pooled capital to invest in, Kumar estimates that about a dozen other companies that pitched to the group have raised money through direct checks from members of the organization.
Now, BAG is also introducing a rolling fund option called 401 Ventures for members. Rolling funds pool capital and then deploy that capital on a quarterly basis. Unlike with the SPVs, where the individual members pledge capital on a deal-by-deal basis, Kumar and Farkash will be making the investment decisions once the capital is raised more like a venture capital structure.
“You can think of it as an opportunity to be an LP (limited partner) in a fund with a lower threshold and greater optionality,” Kumar and Farkash wrote in an email.
Kumar and Farkash added that their initial goal is to pool $100,000 per quarter, with the initial commitment length three quarters and $30,000, or $10,000 called once per quarter. They also said they expect there will be some deals that include both the SPVs and 401 Ventures.
A rolling fund, according to the two, has several advantages. It offers more diversity because you are investing in a portfolio of companies instead of just one, and priority access because a rolling fund can move quicker than an SPV. A rolling fund is also a time-saver for those who don’t have the time to invest but still want to get in on the action.
“We aim to ultimately grow based on our track record and be able to invest $1 million+ per quarter in high-growth startups with tremendous upside,” Kumar and Farkash wrote in their email. “We will be on the hunt for the next MongoDB, Workday and GoJek (all multi-billion dollar companies founded by Brown alums).”
Bram Berkowitz is a contributing writer for Rhode Island Inno.
