THE BLOG
05/21/2010 05:11 pm ET | Updated May 25, 2011

Angels Hover Over Small Businesses, and Some Are Making Deals

"I think the GulfCoast Venture Fund event has been very successful for LinguaSys," Brian Garr says. "I have one investment banker who was there who is working with a host of investors to invest (in my company), and I have two GulfCoast members who may be invested by the end of May."

Garr, the CEO of LinguaSys International, is based in Boca Raton, Fla. He is seeking venture capital for his language translation company to take it from its embryonic stage to a world-beater in less than five years. That is what venture capitalists look for.

But since he is not asking for millions of dollars, the deal is too small for large venture capital firms. Additionally, they seek more mature, cash-flowing enterprises.

For these reasons, Garr and five other entrepreneurs presented their companies to an audience of angel investors in Sarasota, Fla. Angels are often wealthy individuals that invest under $1 million in promising, new companies.

The southwest Florida-based GulfCoast Venture Fund organized the event last month to match seekers of venture capital to angel investors. Each presenter had ten minutes to talk about his or her company. They made slide presentations and tried to highlight enough features and benefits to create credibility.

These companies are too risky for traditional business loans from conservative banking institutions. Some are yet to be launched or do not have positive cash flow, all requirements for prudent lending.

After the presentations, the entrepreneurs schmoozed with the angels and tried to set up meetings after the event. But Ft. Lauderdale's Paul Krueger was not in the running when I last checked. He is the president of Krueger Audio Technologies, Inc., a company that manufactures high quality, patented speakers suitable for cruise lines, cocktail lounges and other commercial venues. Moreover, he has a proven track record managing and growing previous businesses, a desirable attribute that suggests future success.

Yet, he says that he is not in one of the handful of industries preferred by investors. "The ones that do get funded typically fall in the biotech, Internet, or energy spaces," Krueger says. His company is not high-tech or in one of the industries that venture capitalists believe can give them a double-digit return in three to five years.

Meanwhile, Danielle Schwolow clearly fits the description of an Internet entrepreneur. She lives in Hollywood, Fla. and introduced her social networking web site. Schwolow expects to grow it quickly, and be acquired by a much larger company.

"I have received nothing but positive feedback, encouraging words, and priceless business advice," she says about the Gulf Coast Venture Forum. "I received a written offer towards the purchase of equity in my company StatusStalker.com."

"I am currently in what I'm calling the 'lawyer phase'," says the entrepreneur. "So if we can reach terms that we are all happy with, then yes, I am going to accept their offer."

Just like Krueger's products, LifePath Group, LLC. of Lutz, Fla., has a patented, quality product that does not fit the high-growth industries sought by equity investors. Nick Fenger, a business coach and part owner made the presentation. "Mixed to disaster," he says about the matchmaking event. "No one followed up with us from that group."

Russell Tuff, publisher for a start-up newspaper in Naples, Fla. did not have a deal in hand when I last traded e-mail with him. But he hinted that there might be some interest.

The sixth presenter was Colleen Kvetko, president of Florida Shores Bank -- Gulfcoast. She is raising equity to purchase stock in Shamrock Bank in Naples. The presentation fact sheet says, "By purchasing 60% - 100% of Shamrock, we are raising 8-12 Million."

She did not respond to any of my three e-mails.


Jerry Chautin
is a volunteer SCORE business counselor, business columnist and SBA's 2006 national "Journalist of the Year" award winner. He is a former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender. You can follow him at www.Twitter.com/JerryChautin