COLUMBUS, Ohio — Early stage venture group Ohio TechAngel Funds has raised $2.5 million for its third investment fund, according to a regulatory filing.
Like the group’s previous funds, Ohio TechAngel Fund III will invest in Ohio-based technology companies in the life and physical sciences, and information technology industries, said John O. Huston, co-manager of the funds.
Angel investors invest money and experience in young companies. In recent years, groups like Ohio TechAngels have organized these investors and joined forces with other angel groups to provide vital pre-seed and seed capital that creates jobs and brings products to market.
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In Ohio, these groups and the economic development  organizations that often support them have received millions of grant dollars from the Ohio Third Frontier project.
Some of that support is starting to show. Huston said his first TechAngel fund was invested at a rate of one company per quarter, and the second fund, one company every two months. “We’re picking up the pace and I’ve frankly never seen the quality and quantity of deal flow to be so strong,” he said.
Launched in 2004, Ohio TechAngel Funds has nearly 300 members and has received more than $3 million in grants from Third Frontier, including $1.6 million for its third fund.
TechAngels typically invests amounts in the range of $100,000 to $1 million alongside other angel funds, such as Cleveland’s North Coast Angel Fund and Cincinnati’s Queen City Angels, as well as alongside venture capital funds and its own members.
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Companies that receive investments from the funds must be located in, or willing to move to, Ohio, preferably Central Ohio, where co-manager TechColumbus is located.
In 2008, TechAngels joined with six other Ohio angel groups to form an Ohio chapter of the Angel Capital Association to better communicate about and coordinate investments in promising entrepreneurs and companies. Huston chairs the national angel association board.
“We syndicate deals regularly,” he said. “One of the benefits of the angel network in Ohio, it’s so tightly woven, that we know the other deals our brethren are looking at and we co-invest substantially.”
TechAngel Funds has fully invested its first fund of $3.5 million in 16 companies like Columbus-based biopsy device company CleveX and Cleveland-based heart device firm Interventional Imaging.
The first fund’s investment in Minimally Invasive Devices LLC is an example of how angel groups got together to invest. Four different angel groups in Ohio invested $3.8 million in the Columbus developer of tools used in minimally invasive surgeries, Huston said.
The group’s second fund, launched in 2008 and totaling $4.65 million, has been invested in 11 companies like Cincinnati’s AssureRx, which is developing genetic tests to determine how patients could react to certain medicines, and Great Lakes Pharmaceuticals, the Beachwood company that is developing a solution to prevent infection and blood clots in catheters that stay in the body for long periods of time.
Ohio TechAngel portfolio companies have created 320 jobs, excluding jobs created by the fund’s two most recent investments, he said. “It’s not the number of jobs that makes us so proud. What is the exciting aspect of this job growth is the average salary is $72,009.
“What is so critical to the State of Ohio where the average salary is less than half that, is these young, start-up, technology companies have to pay high wages to attract the talent that’s necessary to execute complex strategies,” Huston said.
“We can do a handful more deals in our second fund,” Huston said. So why raise a third fund now?
The Ohio Department of Development opened a request for proposal in November, which could result in more money for the third fund. “Also, our deal flow has picked up so dramatically, it would be a travesty if we had a full pipeline of deals and found ourselves out of money and just starting to raise a third fund,” he said.
MedCity News staff writer Brandon Glenn contributed to this report.
