Investors Network Making Impact

Early-stage companies in region receive $32 million since 2005

July 30, 2008 – The Akron Regional Change Angels (ARCHAngels) -- a network of some 300 investors who meet quarterly to hear about new business opportunities -- says it has helped young companies in Northeast Ohio find $32 million since 2005.

In its first attempt to gauge the network's impact on the region's economy, the organization sent surverys to 41 startup companies who have presented their needs to investors during quarterly meetings.

Of those who reported back, 22 companies said they received funding from contacts made suring ARCHAngels events.

"We have heard success storeies from some of our presenters, knew details of a few specific investments, and even of checks being written on the floor, but we had no measurement of how many companies were getting how much financial support," said Gordon Schorr, a founding member of the network.

John Myers, who works with the University of Akron Research Foundtion that started the network, put it even more succinctly: "We were blown away."

Waiting for survey results to come in, Myers said the ARCHAngels leadership compiled some anecdotal information and guessed it would be closer to $10 million.

The companies that typically make it through the ARCHAngels presentation screening process are early-stage technology companies that need money to research the market, test their product, or begin commercialization.

John Lauletta, chief exectuive officer of Exacter Inc., said he turned to the ARCHAngels just a few months after his company launched in 2006.

The company developed a system that can sense when a utility transformer is failing by monitoring the airwaves using sensors mounted on roving vehicles, like buses and city trucks. When the device reads a troublesome signal, the utilty customer is alerted where to send maintenance crews before a power outage occurs.

When Exacter presented to the Akron-area investors, "We needed capital to start hiring people and paying rent and help us get through our first year of operation," he said.

At the ARCHAngels meeting, Exacter made contacts that led to a $350,000 investment from the venture capital group Northcoast Angel Fund.

"ARCHAngels really kicked things off for us," Lauletta said.

Exacter has since moved to Columbus to take advantage of Ohio State University's high voltage laboratory. It now employs 11 and has seen sales grow 45 percent in each of the last seven quarters, Lauletta said.

Myers said ARCHAngels has never tried to quantify its impact before -- "Gordon likes to say we're in stealth mode" -- but recent partnerships have placed an emphasis on results.

The survey was done for an Ohio Third Frontier grant proposal co-written by ARCHAngels and the Lorain County Community College Foundation to benefit LCCC's Innovation Alliance Fund. On Tuesday, Third Frontier announced a $500,000 award to the innovation fund, which provided early stage "gap funding" of up to $100,000 to companies in Northeast Ohio's 21-county region for critical technology and business demonstrations. On June 4, the Innovation Fund announced a $100,000 award to an ARCHAngels-sponsored company, Sensor Development Corp. An investor from the ARCHAngels Network helped secure matching funds.