Northeast Ohio’s largest angel investor group, North Coast Angel Fund, is nearing an $8 million close on its second fund.
After securing $4 million in grant commitments from Ohio’s Third Frontier program, North Coast expects to close the private half of its fundraise in the next few months, Clay Rankin, the fund’s manager, said. Rankin and Todd Federman, the fund’s executive director, act as the fund’s administrators.
North Coast’s $5.5 million first fund closed in 2007, and also was comprised of an equal split between public and private dollars. That fund is fully invested in 21 portfolio companies, all of which have a presence in Ohio. The fund enjoyed a flurry of activity in a 15-month period during 2009 and 2010, investing in 13 companies in that time.
When Investment Rhymes with Canada
Canada has a proud history of achievement in the areas of science and technology, and the field of biomanufacturing and life sciences is no exception.
“We’ve been as active as anyone in getting deals done in Northeast Ohio,” Rankin said.
Armed with a heftier second fund, North Coast plans to make larger initial and follow-on investments this time around — about $250,000 for initial investments compared to $200,000 in the first fund, and $200,000 for follow-on investments, up from a maximum of $100,000 last time.
North Coast encourages its individual members to participate in “sidecar investments,” with the goal of bringing an aggregate of $500,000 to $1 million to each of its portfolio companies. It’s those sidecars, plus co-investments from partners like state-backed Cleveland venture fund JumpStart Inc., Columbus’ Ohio TechAngel Fund and Cincinnati’s Queen City Angels, that make North Coast’s influence larger than just the size of its own fund.
Between the two funds, Rankin expects to have a total membership of nearly 180 individuals. North Coast Angel Fund functions by majority vote, with members eligible to vote on whether or not to invest in a prospective portfolio company. Such a big number of decision makers could be a recipe for sclerosis, but North Coast avoids that with a rule that requires voters, or proxies, to attend its a meetings to be eligible to vote.
At eight, companies in life sciences outnumber those from any other industry among North Coast’s portfolio companies, and that’s no coincidence. Rankin and Federman pointed to Northeast Ohio’s many assets in the sector — Cleveland Clinic Innovations, Case Western Reserve University‘s biomedical engineering program, nonprofit business development group BioEnterprise, to name a few — as one reason why they expect North Coast’s biomedical investments to continue.
“I think what we’re seeing is the benefit of having a community that’s heavily focused in this area,” Rankin said, highlighting what he considers three medical subsectors of particular strength in Northeast Ohio — imaging, neurostimulation and regenerative medicine.
North Coast’s biomedical portfolio companies include: Cincinnati-based personalized medicine test maker AssureRx Health, Columbus-based heart test company CardiOx, Chagrin Falls-based device maker CerviLenz and Beachwood-based drug developer Great Lakes Pharmaceuticals.
North Coast has already made two investments out of its second fund — information technology companies Znode and Sparkbase. Members have approved a third investment and are conducting due diligence on five other possibilities, Rankin said.
