This story is part of a series about Washtenaw County businesses' response to the COVID-19 pandemic. Support for this series is provided by Ann Arbor SPARK.
In an economy upended by the COVID-19 pandemic, the Ann Arbor-based Michigan Angel Fund (MAF) has remained committed to helping local emerging businesses. Since the pandemic began in March, the fund has kept busy – and even made its biggest investment to date.
"We moved quickly to take the temperature of investors and assess the attitudes of companies," says Skip Simms, manager of MAF. "We were pleased to write 10 checks for nine companies last year."
MAF's 2020 investments totalled $1,102,571. Both March and July saw the addition of a company to MAF's portfolio. There were several follow-on investments to MAF's existing portfolio companies, one of which resulted in MAF's largest single investment: a bridge note to Ann Arbor-based genomic health IT company Genomenon in May.
Speaking to what prompted MAF to make that investment, Simms says MAF recognized exciting potential. Last year Genomenon was going to do a sizable round of Series B funding. When investors who were interested in March backed out in April, Genomenon CEO Mike Klein suddenly found himself having to make some tough decisions.
"We brainstormed and he decided to raise a much smaller amount of capital. Instead of raising another equity round, they would do a bridge note and rely on their current investors to give them enough capital," Simms says. "It would give them a 12-24 month runway to get through these times, and then they can go back out and raise the capital."
Simms feels that many of MAF's portfolio companies experienced "a huge sense of relief" last May. At the time, there were unknowns that loomed especially large overhead: Would their existing customer pipelines continue to mature? Could they actually get sales or close sales? Or was the economy simply going to shut down?
"These questions answered themselves by the end of the second quarter," Simms says. "Customers were still looking for the kinds of technologies and services that our portfolio companies were providing, and were willing to meet with their sales departments."
A few of MAF's portfolio companies in sectors that weren't buying had to quickly make reassessments to survive. Simms reports that all of the MAF portfolio companies made it through 2020, and some were even acquired by other companies.
Using Genomenon as an example, he cites some of the types of successful moves undertaken.
"They made inroads with their customer base and improved their product to make it more appealing," he says. "They also strategized to make progress in the marketplace in terms of recognition of their value proposition."
Simms says the fundamentals required of a company to raise capital, and the fundamentals investors use in determining whether or not to make an investment, didn't change because of the pandemic.
Overall, he feels the pandemic has been "interesting and positive" for MAF's portfolio companies.
"We're really excited," Simms says. "One thing that became apparent is that if you have a good strategy for working through the current times and beyond, you can get funded."
For more Concentrate coverage of our community's response to the COVID-19 crisis, click here.
Jaishree Drepaul-Bruder is a freelance writer and editor currently based in Ann Arbor. She can be reached at jaishreeedit@gmail.com.
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