Meet Ohio’s angel investors (and see what they want in a company)

Angel investors are a secretive bunch.

They generally prefer to stay out of the limelight and let the companies they invest in receive the attention. But thanks to a state-sponsored tax credit, at least some of the investment activity by Ohio’s most prominent angels has come to light.

Through a public records request to the state of Ohio, MedCity News obtained a list of investments made through the state’s Technology Investment Tax Credit (TITC) program. Under the tax credit program, investors who put money in approved companies are eligible for a tax credit of up to 25 percent of the amount they invest, with a maximum of $250,000 per investment per company eligible for the credit. The list from the state includes names of investors and the companies they’ve invested in, but omits the amounts.

It’s likely only a fraction of the angel investment that happens in Ohio does so through the tax credit program. But all that other data isn’t public record, so the tax credit investment information from the state is the best we’ve got.

Cash-hungry entrepreneurs can pore over the entire list. Below, however, is a list of the 10 Ohio investors who’ve made the most investments through the state tax credit program.

Each of the investors on the list have at least two things in common. First, they’re members of at least one of the state’s three major angel groups: Columbus’ Ohio TechAngel Fund, Cincinnati’s Queen City Angels and Cleveland’s North Coast Angel Fund. Second, they should not be contacted directly by entrepreneurs under any circumstances. They won’t be happy. Instead, entrepreneurs should submit business plans through each of the three angel groups’ websites.

John Huston, 27 investments

Huston is one of the principals involved in Ohio TechAngel Fund (OTAF), which was recognized by Entrepreneur.com as the largest angel group in the country and boasts about 280 members. The group has raised three funds, with the first coming in 2004, and enjoyed four exits. Huston invests exclusively in Ohio companies that have qualified for the state technology tax credit, he said. He subscribes to the “bet-on-the-jockey, not-the-horse” school of investment, placing a high priority on strong management.

“What’s most important to me is whether I think the entrepreneur has a high likelihood of success,” he said. “Our goal is to invest in companies that have a high likelihood to be sold and leave that sudden wealth to the entrepreneurs.”

Huston typically personally invests between $10,000 and $25,000 in a company, and limits himself to a maximum of $100,000 per company. His advice for entrepreneurs? Exhaust all options for obtaining nondilutive funding, such as state loans and similar programs, before getting in front of angel groups. Angels will be impressed you did your homework.

Healthcare investments: AssureRx, CardiOx, CleveX, Endosphere, Great Lakes Pharmaceuticals, InfraRed Imaging, Minimally Invasive Devices, Neuros Medical, TheraVasc

Walter Doyle, 24 investments

Doyle is president of Forest Capital, a Columbus-area angel capital investment firm, and a member of the Ohio TechAngel Fund. Earlier, he founded Industrial Data Technologies, which made high-tech products for factory automation projects in the steel, automotive, food and chemical industries. A former U.S. Army paratrooper, Doyle has a background in electrical engineering and business management.

He invests only through OTAF, because he doesn’t have time to go through the diligence process on his own. His highest priority when it comes to angel investing is an entrepreneur who possesses the wide variety of management skills to make a young company successful – sales, marketing, finance and the like. To Doyle, investing is about far more than a company’s technology.

“The old expression ‘Build a better mousetrap and the world will show up at your door’ is bullshit,” he said.

Healthcare investments: AssureRx, CardiOx, CleveX, Endosphere, Great Lakes Pharmaceuticals, InfraRed Imaging, Minimally Invasive Devices, Neuros Medical, TheraVasc

John Habbert, 21 investments

Habbert is a founding member of Cincinnati angel group Queen City Angels (QCA), and also a member of Ohio TechAngels. He manages QCA’s three seed-stage investment funds. A former Procter & Gamble employee in manufacturing and product development, Habbert has a chemical engineering background. He was previously president of electronics company Crane Connectors.

Habbert invests only in deals sourced  through the QCA or OTAF due diligence process. “I’ve learned to trust the disciplined investment process that we go through,” he said.

Healthcare investments: AssureRx, Charles H. Mack & Associates, Minimally Invasive Devices, Neuros Medical, SpineForm

Tony Shipley, 15 investments

Shipley is a founder of QCA, and serves as the group’s chairman. Shipley began forming QCA in 2000, shortly after he exited Entek IRD International, a manufacturer of software and hardware that helped companies decide when to do maintenance on their machinery. The company was sold to Rockwell Automation. The 45-member QCA has invested $30 million in 50 companies over its lifetime. The 65-year-old Shipley recently told the Cincinnati Business Courier that he doesn’t plan on retiring from angel investment any time soon.

“We believe that a good investment starts with a great team, one that we have confidence in their ability to achieve their stated goals,” he told the news outlet. “We also like defensible technology (intellectual property) or a strong likelihood of being first to market; a large unserved or underserved marketplace; a clear customer problem being addressed by the company and a clear value proposition; and a reasonable expectation for the amount of capital needed by the business.”

Shipley invests almost exclusively in companies that present to QCA. His “sweet spot” is investment of between $25,000 and $50,000 per company. He doesn’t respond to direct inquiries from entrepreneurs, preferring they reach QCA through monthly networking events hosted by The Circuit, the Cincinnati area’s top IT association.

He advises entrepreneurs to sharply hone their various pitches: 30 seconds, 5 minutes, 30 minutes and the like. “Think carefully about how to present [your company] in a way that sounds like an attractive business proposition to investors,” he said.

Healthcare investments: AssureRx, Charles H. Mack & Associates, SpineForm

Robert Maynard, 14 investments

Maynard is president of Columbus-area Tappan Woods, a strategic research firm, and a member of Ohio TechAngels. Beyond that, he boasts an extensive resume: former Navy JAG officer, U.S. Justice Department trial attorney, special assistant to the Interior Department solicitor, Ohio Environmental Protection Agency director and partner in two big law firms.

He invests only in companies that OTAF invests in, and likes companies that “offer the promise of real medical advances.” However, he stresses, “It’s less important to know what my tastes are than to have a sense of the tastes of the broader group.”

He typically invests between $10,000 and $30,000 in a company. “My strategy is to invest a modest amount of money in a lot of companies and play the averages,” he said.

Healthcare investments: CardiOx, Endosphere, TheraVasc

William Harvey, 13 investments

Harvey is a member of Ohio TechAngels and wasn’t available for comment.

Healthcare investment: Minimally Invasive Devices

Don McKee, 12 investments

McKee is the retired chief financial officer of insurance company Ohio Casualty. He’s a member of Queen City Angels and chairman of the board of Collaborent Group, a Cleveland-area company that offers a discount buying service for municipalities and small businesses.

For healthcare investing, McKee typically prefers companies that don’t have to go through the “long, drawn-out” regulatory process, though that doesn’t apply to all of his healthcare investments. He typically invests between $20,000 and $50,000 per company.

“When it comes to angel investing, the most important thing is diversification,” he said. “Anybody going into angel investing who wants to achieve a good return needs to invest in at least eight companies over a period of a few years.”

Healthcare investments: AssureRx, Charles H. Mack & Associates, Ischemia Care, Minimally Invasive Devices

Bart Bucci, 10 investments

A member of  the North Coast Angel Fund (NCAF), Bucci is an investment manager with Morgan Stanley Smith Barney. He joined the company after 13 years with Wachovia Securities. He declined comment for this article through an NCAF official.

Healthcare investments: SironRx Therapeutics, Juventas Therapeutics, Neuros Medical, Workflow.com

Jeffrey Chokel, 10 investments

Chokel earlier this year retired from his post as CEO of the Cleveland Vibrator Co., an industrial equipment supplier. Along with Bucci, Chokel is a member of North Coast Angels. He declined comment for this article through an NCAF official.

Healthcare investments: Juventas Therapeutics, CardiOx, Cervilenz, Great Lakes Pharmaceuticals, TheraVasc

Lee Hess, 10 investments

Hess is a member of Ohio TechAngels, as well as  co-founder and chairman of Installs Inc, a national installer of home services that works with major retailers. Earlier, he was an executive with Wendy’s and directed growth of the fast food chain’s national franchising network.

Hess invests only in OTAF deals. In terms of his medical investments, he said they have two things in common: First, he’s been impressed by the “pedigree” of the researchers who pioneered the technologies. Second, the “strategic premise” of each company must make sense to him. “If I can’t understand the concept, I’m not going to invest,” he said.

His typical investment amount per company lies between $10,000 and $25,000. “Angel investing is by definition high-risk, so you don’t want to put too much in any one company,” he said.

Healthcare investments: AssureRx, CardiOx, CleveX, Minimally Invasive Devices, TheraVasc