By Tom Still

PLATTEVILLE – Inside the Nohr Art Gallery on the
UW-Platteville campus, 15 or so people gathered last week to talk about a lot
more than the paintings and photographs on the walls.

The group included business people from the region, which
includes southwest Wisconsin and nearby Dubuque, who have succeeded in
agriculture, communications, software and engineering. It also included campus
leaders who wanted to know more about how to channel student and faculty
interest in entrepreneurism.

The topic was angel investing, a subject usually discussed
on the nation’s coasts and larger cities, but increasingly part of the
conversation in states such as Wisconsin.

At the invitation of UW-Platteville Chancellor Dennis
Shields, the group heard about trends in angel investing nationally and in
Wisconsin. It was part of an “Investors’ Edge” presentation by the Wisconsin
Angel Network, which is part of the Wisconsin Technology Council.

What are angel investors? No, they’re not spiritual beings
come down from above with celestial cash. They are accredited high-net-worth
individuals who invest money, time and their own expertise in startup business
ventures. Angels typically do so early in a company’s lifespan – before venture
capitalists enter the picture – in hopes of realizing a sizable financial gain
over time.

The “angel” part comes into play because these investors are
typically entrepreneurs themselves who care about sharing their good fortune
and experience with others. Return on investment is No. 1 on any angel’s
priority list, of course, but enlightened self-interest side often enters the
equation, as well.

That’s because angel investing is predominantly a local
sport, as demonstrated by the annual “Halo Report” released this week at a
meeting of the Angel Capital Association.

The 2013 report charted the size of typical angel deals
(about $600,000 nationally), total estimated volume of deals, popular
investment sectors – such as health care, Internet and mobile – and leading
angel network and funds across the United States.

Most of those networks are clustered in California, Texas,
Boston and other coastal bastions, as might be expected. However, a trend noted
in the report was the strength of angel investing in the Great Lakes region
that includes Wisconsin.

While California led with 18.6 percent of all angel deals,
the Great Lakes region was second at 11.8 percent of deal flow. That was
slightly ahead of the Southeast (11.7 percent) and New England (11.3 percent),
with New York, the Mid-Atlantic, Texas and the Northwest all falling in the 8
to 9 percent range.

In Wisconsin, the rise of angel networks began about 15
years ago with the formation of groups such as Wisconsin Investment Partners in
Madison, Origin Investments in La Crosse, Silicon Pastures in Milwaukee and
Golden Angels in Milwaukee. The advent of state tax credits for angels who
invest in specific “qualified” companies has helped drive up total investments
from a few million dollars per year to more than $60 million in a typical year,
all in young companies.

Today, there are roughly two-dozen active angel groups in
Wisconsin, as well as some later stage funds and corporate investors. The
Wisconsin Angel Network (
helps provide access to deals and networking for all of them, and has been a
part of helping form or renew networks in places that might seem off the beaten

Ten years ago in Wisconsin, there were only two angel
networks outside Milwaukee or Madison. Today, there are a dozen in communities
such as Marshfield, Eau Claire, Oshkosh, Vilas County, Wausau and beyond.

Angel networks are typically a group of investors who
meet periodically to review and co-invest in business opportunities, with no
requirement that each member invests in every deal. Angel funds are more
formal structures in which each member invests in the fund – and the fund
collectively selects the deals. Such groups increase the quality and quantity
of deals that can be reviewed, spread the costs of due diligence before any
investment are made, and create more co-investment opportunities.

Also, entrepreneurs can draw some comfort in dealing with
networks and funds because they know the investors are “accredited,” which
means they meet certain income and net worth requirements. Investments made by
accredited investors exempt the entrepreneur from certain federal filing
requirements and regulations.

Not every community is ripe for an angel network by a
longshot. For those places that meet certain self-imposed tests, however, it’s
one more way to build economic strength close to home. It’s not for the faint
of heart, but Wisconsin is proving that angel investing need not be just for
the big cities and states, either.