Saturday, February 4, 2012

New Angel Fund in Chicago

Just last week a new angel fund, FireStarter Fund, was launched in Chicago with members that include some of the big names in the Chicago tech scene including Excelerate Labs' Troy Henikoff, New World Ventures' J.B. Pritzker and CEC's Kevin Willer. There are more than 40 angel investors who have joined the group and each member will be contributing $100,000 or $200,000 to the fund, which will provide a good chunk of new seed stage funding for Chicago's startup scene.

The fund is structured a bit differently than the other major Chicago angel funds (Hyde Park Angels, Cornerstone Angels, and Heartland Angels) in that the majority of the members do not need to vote to fund the startup. In fact, as few as six members can say yes in order for the fund to invest a small amount in a new company. Each member also has the option to co-invest in the companies that pitch to the fund, so in the event that a member finds a startup they think is very promising they can invest more than the $200,000 they initially put into the fund. In the first four years of the fund (in total it will be a 10 year fund), the group expects to make 15 to 20 investments at $150,000 to $350,000 per investment, which is smaller investment amount than some of the other angel groups.

This new structure is especially appealing to startups, since many angel funds tend to be very bureaucratic and need majority vote in order to approve new investments. If everything goes well with this new angel fund, older angel groups may consider changing some of the rules they currently have in place to allow for this added flexibility.


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