Thursday night, a room at the Jeremy Ranch Country Club welcomed three entrepreneurs to present their companies to the gathered angel investors.
This was the monthly Park City Angels meeting, an angel investor syndicate started in 2007 to invest in tech or growing companies, especially Utah-based ones.
“Utah has been a hub for entrepreneurship. There’s just great entrepreneurs in Utah. In 2007 there was a shortage of angel investment,” said Ted McAleer, co-founder of the Park City Angels.
Angel investors are high-net-worth individuals who invest their personal capital as seed money into start-up businesses, usually with ownership equity in the company in exchange. After identifying how to get product-market fit — where a company’s target consumers are engaged enough to sustain growth and profitability — the next step for tech companies is to raise angel investment, said McAleer.
“I said, ‘Hey, we need more early stage capital to fund entrepreneurs. And I’m going to create a network and we’re going to call it the 50- to 75-year-old active semi-retirees who want to support entrepreneurs growing their businesses,'” said McAleer.
These semi-retirees, like himself, were people who had moved to Park City after successful runs in the business world.
“(They) were skiing, fly fishing, mountain biking, golfing, doing all the fun things that people love to do, and frankly getting a little bored from a business standpoint,” said McAleer.
Forming an angel syndicate gives these people a chance to tune into the latest technology and Utah business world, he said.
Investing in companies as an angel can have similar or even better returns as investing in the stock market, said McAleer. There’s also more personal involvement, he said, especially compared to stock trading or just donating to a nonprofit.
“With entrepreneurs, they like to coach the entrepreneurs, they like to mentor the entrepreneurs, sometimes a 50 to 75 year old will see in this 28-year-old entrepreneur, ‘Wow, that’s what I was like when I was 28. I want to mentor them. I want to see them succeed,'” said McAleer.
When the group first formed, there were about 20 investors. Now they have 87 investors.
One thing that sets the Park City Angels apart is their use of a fund. In order to become a member and gain access to the investment opportunities presented to the group, investors are asked to put $25,000 into a fund every two years, said McAleer. The money in this fund can then be invested in a company as well, activated if four angels choose to invest and the amount given totals $150,000. Then the fund will match.
“They put $25,000 into Fund One, and then that makes investments during 2022 and 2023. And now we have 11 investments in 2022 and 2023, and I only wrote a check for $25,000, but I’m participating in 11 investments,” said McAleer.
From the entrepreneur’s side, this fund is a major benefit, said Eric Lo, founder of Krado, a Utah-based plant data company that develops sensors for plants called Leaflet. The company received funding from the Park City Angels in 2022. (For more on Krado: krado.co)
“It’s like, ‘Oh, that’s easy. I just need to get four people and then essentially the money I could get doubles with no further work on my end,'” he said.
His experience with the group was also unique because of their process.
“Out of all the angel syndicates, Park City is like one of the most active and best, meaning that they actually make decisions really quickly,” said Lo.
While other angel syndicates are almost impossible to find, he said, like the Salt Lake City Angels and the Wyoming Angels, other groups may even charge a fee to present the investment opportunity.
Also, in his experience, other groups are often made up of wealthy individuals who haven’t built companies themselves, meaning they don’t know what to look for or the right questions to ask.
“Park City, where a lot of them are all either CFOs, ex-operators, they have some tie in with companies and they know, ‘OK, this is what’s valuable, what’s not valuable.’ And they’re highly, highly active,” said Lo.
This active engagement moves entrepreneurs through the application process quickly, said McAleer.
They receive around 50 business plans per month, he said, which are screened and whittled down to around 10 that move into talks with the entrepreneur. Seven businesses are invited to a screening meeting, then of the seven, three are brought before all the Park City Angels at a monthly meeting.
These meetings alternate from in-person to on Zoom, which allows members to be involved outside of Utah and also engage businesses from across the country. The three entrepreneurs are given 20 minutes to present their business plan and engage in a Q and A with the investors.
“We try to make at least one investment every two months. And last year in 2023. We made over 10 investments,” said McAleer.
Their portfolio includes companies like Krado; High West Distillery; Joule, a battery technology company; CONBODY, a workout platform; Literal, a book streaming tool; and Trace, a genealogy research process.
On Thursday night, the angels were presented investment opportunities in Shark Tank style, hearing from three health-oriented tech companies: Nutrastrips, oral dissolving supplement strips; Gulp Vitamins, a personalized multivitamin subscription; and ReddyPort, a respiratory ventilation technology.
Interested investors engaged following each presentation: “What’s your exit strategy? What sets you apart from competitors? How much capital have you raised? What’s the cost to consumer?”
In the dinner that followed, more conversations involved discussion of deals amid general comradery — not so much like Shark Tank.
“The difference between Shark Tank and us is we’re trying to be nice to the entrepreneurs. We want to make sure that entrepreneurs never finish working with us and say, ‘Wow, those Park City Angels are a bunch of jerks,'” said McAleer with a laugh. “We have kind of a no jerk policy.”
Without the Park City Angels and people willing to invest in businesses here, the Utah business and startup ecosystem wouldn’t be what it is today, said Lo.
“We’re coming on the map in terms of activity, in terms of exits, in terms of value, in terms of start-up creation. It’s starting to bubble up,” said Lo. “We’re quiet about it. We focus on building and we aren’t bragging about it like others and that’s what I love and that’s why I’m still here.”
For more about the Park City Angels, see parkcityangels.com or on LinkedIn at linkedin.com/company/park-city-angel-network. Entrepreneurs interested in applying for funding can learn more on their website under the “For Entrepreneurs” tab.
