It is time to get back to old-fashioned banking, according to Ken Kousky.
"The typical American sends their money to Wall Street," said Kousky, Executive Director of the Blue Water Angels investment network in Midland. "We're suggesting investing on Main Street, instead."
The IRAs, 401Ks and pensions that Wall Street's brokers have handled, according to Kousky, have plummeted in value in recent years.
"People pay extraordinary fees for these investments, and most of them have lost a large portion of their savings since 2008," Kousky said. "Why not invest in your neighbor's daughter's business instead?"
Enter
Blue Water Angels.
More than 50 high-net-worth individuals and organizations make up the network's membership--all of them devoted to investing private capital to fund the start or growth of existing companies with promising futures. Most of the four-year-old Blue Water Angels' investors are locals of the tri-city area of Midland, Saginaw and Bay City.
"Many people don't understand what angels investors do," Kousky says. "They are actually private investors--they invest like venture capitalists do, but, rather than managing other people's money, they manage their own money."
Back to your neighbor's daughter.
"Let's say she goes to college, gets her degree in physiology and could easily work for someone else," Kousky analogizes. "But her passion is helping the elderly and she wants to start a wellness center for people over 65 instead. If she can do it, she'll create new jobs in the community as her business grows."
"That's the essence of angel investors," Kousky said. "I'd much rather put $10,000 into her business than my brokerage account--I like to see where my retirement investment is. It's a sound investment that strengthens the community." Every successful business fills an unmet need, according to Kousky. Filling that gap results in the creation of jobs and the creation of wealth--locally.
It sounds like every would-be entrepreneur's dream come true.
But each dreamer undergoes a series of lengthy screening evaluations before being accepted into the fold of organizations that are born or expanded with Blue Water Angels' investor funding. The companies that make it through the selective processes are mentored, educated and coached until they are sound in all areas of their operations--not just sales, accounting and marketing, but also areas like protection of intellectual property; how to obtain patents, trademarks and copyrights.
"It took about 15 months from the first meeting until the deal was done," says Jim LeCureux, operating manager and founding member of Mrs. Glee's Gluten-Free Foods in Hillman, who proved to Blue Water Angels that his expansion plan was a sensible and valuable investment.
Mrs. Glee's Gluten-Free Foods opened in August 2010, manufacturing and selling a line of products including pastas, cookies and several types of flour, all based on Michigan-grown navy beans.
Eight months later, LeCureux realized he needed assistance to keep the business healthy, so he approached Blue Water Angels.
"I knew that angel investors gave small loans to local businesses and we needed more money for marketing, equipment and general operations," he says. "It took a while for the due diligence process, but within six months, they started giving us bridge loans while they helped us analyze the market to see if we were approaching things the right way."
Since then, sales have tripled, product lines expanded and the employee roster has swelled from two part-timers to five, not including LeCureux.
"It's great work that they're doing," LeCureux says. "They not only bring money to the table, they bring a help to grow the business. They are not just silent investors; it is a package deal. I'm hoping to start turning a profit by the end of the year.
"We wouldn't be where we are without Blue Water Angels."
Heather Fortin heads the recently established
Northern Michigan Angels Network in Traverse City and is also the director for Midland's Mid-Michigan Innovation Center, which manages both the Northern Michigan Angels and Blue Water Angels.
Among her duties is recruiting, educating and screening of potential angel investors; both clubs are looking to expand the memberships with investors from anywhere in Michigan.
What does it take to become an angel investor?
"Individual investors need an income of more than $200,000 and married investors' income must exceed $300,000. Either that, or the investors have to have a net worth of more than $1 million, not including their homes," says Fortin. "They meet the FCC's accreditation standards."
Fortin explained why angel investors have begun to take over the small business loan arena.
"Angel investing has stepped in for traditional banking since the hit on the housing market," she says. "Homes were the main source of collateral in the past to get a small business loan; many people are no longer in that position since home values dropped so drastically, and banks are not willing to take that risk."
Angel investors do not ask for collateral, Fortin said, but that doesn't mean every small business owner or hopeful entrepreneur will get the stamp of approval.
"They give a series of presentations to these clubs over a long period of time before even being considered, and they must have a scalable product that the investors forecast will grow quickly," Fortin says. "We don't just starting cutting checks right away."
An example of a northern Michigan business that has received investment from the Northern Michigan and Blue Water Angels is Altus Brands of Traverse City. The two angel investor groups agreed to assist Altus with $170,000 that the company used to expand by purchasing a local business, Extreme Dimension Wildlife Calls. Extreme Dimension is a leading innovator in creating electronic game calls.
The hunting call business was relocated to the Traverse City area, fitting in well with Altus' existing business, which offers innovative outdoors and hunting products, including Pro Ears, Harmon Scents, Cass Creek products and BenchMaster rifle rests, to northern Michigan and regional customers.
Other companies that have received funding assistance from Blue Water Angels and Northern Michigan Angels include Advanced Battery Concepts and E-Pay Select of Midland, Bandals International in Rochester Hills and Azulstar, Inc. in Grand Rapids.
Kelle Barr, of Portage, has freelanced for over 20 years, writing business and corporate news for many national publications and trade magazines as well as regional publications, including the Kalamazoo Gazette. Barr has also traveled the U.S., the Caribbean and South America reviewing resorts and other destinations as a travel journalist.