Ray Wenig and his group of angel investors first looked at Advanced Liquid Logic’s biological research technology in 2007.
More than half of the Ariel Southeast Angel Partners members invested in the startup. The company’s product is a process that allows for the precise manipulation of blood, saliva and other fluid droplets for DNA, RNA and protein analysis.
The investors’ hope was the firm would attract acquisition interest from genetic testing firms, preferably within two and a half years
The recession “extended out the timetable” but failed to alter the end result. Advanced Liquid Logic was recently acquired by a billion-dollar corporation, Illumina, for an undisclosed amount.
“It was never meant to be a long-term thing — more like in and out,” said Wenig, the group’s president. “Six and a half years is a long time in the angel space. But you take them as they come.”
The deal marked the first “exit” — and significant return on investment — for the Ariel group. It will be the first of many, according to Wenig and Ariel Southeast Angel Partners board chairman Steve Clark.
“With the upturn in the economy, we are expecting an increase in exits among our 18 portfolio companies in the coming years,” Clark said.
Wenig projects one company a year will reach the exit stage going forward. Such success would fulfill the promise that led to the merger of two smaller angel groups to form the Ariel Angels in 2006, the pre-recession peak of technology startup activity.
The Ariel Angels group numbered more than 50 partners prior to the economic downtown but has shrunk to fewer than 40.
The Advanced Liquid Logic exit, combined with what Wenig categorized as “four or five portfolio companies that are currently tracking pretty well,” has rekindled investor interest, he said.
Investor interests
Ariel Southeast Angel Partners’ portfolio is heavy on health medical sciences.
Their investment in 15 biological-related companies reflects the interest of current members. Many are retired and in good health despite a “slightly higher age,” according to Wenig,
Their commitment is driven as much by their interest in their own mortality as it is their financial well-being, he said.
The group’s continued good health, however, is tied to diversification. Advances in software, information technology, e-commerce and digital media are spawning startups. Wenig, whose background is in computer engineering, sees opportunities.
“We’d like to grow our membership because we like having a diversity of interests,” Wenig said. “The greater the breadth of our expertise, the better our chance at being in the right place at the right time for technology breakthroughs.”
The Ariel Southeast Angel Partners is made up of individuals who invest their own money, and members are not required to contribute to each company the group decides to fund. The minimum investment is $5,000 per partner, however, and the group gets an equity stake in return for capital.
The angel group approach differs from that of a venture capital firm. Venture capitalists invest money raised from outside sources and often take a large share, if not a controlling share, in the companies they fund.
Partners in the Ariel Angels group sit on committees that review potential investment opportunities and monitor existing companies. The portfolio companies regularly file reports with the group and meet with the Ariel Angels annually.
The interactivity is another appealing element of angel investing, Wenig said.
“For me, the angel process is fun because you are close to what happens and can see the company grow,” he said. “You get to play an active role.”
Local deal flow
The Ariel Southeast Angel Partners is based along the South Carolina and Georgia coasts, but they look beyond the Lowcountry for deals.
Advanced Liquid Logic was based in North Carolina. Other companies in the Ariel Angels portfolio are located in Indiana, California, New England and Virginia.
The angel group has invested in two local startups. One, Storm Shelter Electronics, makes lightning detectors and electronic shutdown packages and came out of the Advanced Technology Development Center at Georgia Tech Savannah. The other, Music Intelligence Solutions, merged with a company in the United Kingdom and closed its local office.
The Ariel Angels would like to invest more in the Savannah and Hilton Head areas, Wenig said, and are “supportive of anybody who puts seeds in the ground and starts to grow things in the local community.”
The Ariel Angels are an “extremely valuable” part of the local entrepreneurial ecosystem, said Jerald Mitchell with the Savannah Economic Development Authority. Mitchell heads up SEDA’s “Innovations” initiative, which aims to support the creative sector, and noted “dozens of small companies are in the seed stage” and need investment.
“Ariel’s focus is in those early stage companies, and the fact that they are homegrown makes for easier access,” Mitchell said. “And their recent exit says a lot about the process they go through in helping companies succeed.”
ABOUT ARIEL SOUTHEAST ANGEL PARTNERS
Ariel Southeast Angel Partners are accredited individual investors and corporate sponsors who actively participate in reviewing investment opportunities and work on member teams to conduct thorough due diligence on selected opportunities.
Among the group’s objectives: to improve member investment portfolios and financial returns relative to what an individual could accomplish working alone; to promote regional economic development in Georgia, South Carolina and the Southeast; and to provide a satisfying professional, personal and social experience.
Investors comprise a mix of retired, semi-retired and presently working members who share a track record of individual success.
Members are expected to contribute in different ways to suit their individual interests and time availabilities. Members can opt in or out of any deal depending on their personal interest and can invest at any level in pre-determined funding, usually in increments of $5,000.