New fund looks to invest in area companies

The Daily Inter Lake

A group of Montana investors and RAIN Source Capital have created a new fund to invest in Northwest Montana companies.

Frontier Angel Fund has secured more than $800,000 so far and plans to expand to $1.5 million.

The fund will invest primarily in early to mid-stage private companies, but also may consider investing in established companies and private companies in generational or ownership transitions.

The group currently has 15 members, including institutions, RAIN Source Capital and local investors. RAIN is a Minnesota-based company that pools money with investors. Frontier is the 14th "angel" fund in the RAIN network.

"Angel" investors are typically defined as people whose income exceeds $200,000 or whose net worth is over $1 million.

They tend to be self-made entrepreneurs with capital and business expense who are interested in helping other companies grow - especially businesses too small to generate interest among venture capitalists.

Members of Frontier Angel Fund will play an active role in choosing and screening companies requesting investment. Once a business is selected, fund members will monitor its performance.

Involvement in the fund allows members to "help provide an important stimulus for regional business creation and growth, while also bringing the opportunity for favorable return on your investment," said Bob Smith, chairman of Frontier Angel Fund.

Kalispell-based Montana West Economic Development played a key role in the group's formation.

"Investing in growing companies is an important element in job creation," Montana West President Liz Marchi said in a press release. "While Montana has record low unemployment, we are lagging significantly in wages. We believe that increasing access to start-up and equity capital is essential to building innovative, high value, new economy companies in the state."

Angel investors are playing an increasing role in business financing all over the country. In 2005, they invested $23.1 billion in 49,500 American businesses.

"In Montana and across the country, there is a growing interest in supporting emerging companies," said Steve Mercil, RAIN Source Capital's president and chief executive officer. "Individual angel investors, especially new angel investors, are realizing the benefits of investing together as a group.

"The Frontier Angel Fund is the first organized, member-managed group in the state. And, through our network of RAIN funds, businesses in the area will have access to millions of dollars of investment capital."

Frontier Angel Fund will not consider new members until after it makes its first investment.

Interested investors or companies that would like to be considered for funding should contact Marchi at 257-7711.