Earlier this month, the Dingman Center for Entrepreneurship at the University of Maryland’s Robert H. Smith School of Business announced that Craig Dye will take over as Director of Investments. In this new position, Dye will lead the Dingman Center’s Capital Access Network, which provides early-stage funding (up to $1.5 million) to area start-ups. This type of angel investment captial is crucial in nurturing start-up companies.
“Craig will help us continue the center’s role in supporting economic development and innovation throughout Maryland,” said Asher Epstein, managing director of the Dingman Center for Entrepreneurship. “His investment and entrepreneurial experience brings a valued set of skills to lead the Capital Access Network’s growth.”
Economic Growth Through Entrepreneurship
The Capital Access Network is one of the Mid-Atlantic’s largest angel investment networks linking entrepreneurs with potential investors. Together with regional tech councils, incubators and state-funded institutions, Dye will work to expand the Dingman Center’s regional presence and outreach across the university’s campus.
In addition to providing early-stage capital, the Dingman Center provides MBA and undergraduate students at the Smith School with practical experiences and opportunities to pitch their business ideas, obtain feedback from experienced entrepreneurs-in-residence, and access funding.
Angel Investors vs. Venture Capitalists
Angel investors and venture capitalists are similar, but there’s are a couple of key distincitons. Angel investors put their own money into a business, and it is typically less than what can be raised from the venture capitalists. An angel investor is any individual who provides start-up capital in exchange for debt or equity. Sometimes they organize into groups or networks to share research and pool their investment capital, but even when they do, it’s typically their own money on the line. This differs from venture capitalists, who manage the pooled money of others.
The amount invested by angels fills an important gap between the resources entrepreneurs can raise on their own and formal venture capital, which usually considers only very high dollar investments. Angel investment is sometimes a viable ’second round’ of financing for high-growth start-ups.
Like companies who receive venture capital, their start-up nature makes angel investments high risk. This, plus the fact that if the business is successful, the investment will likely be diluted by future investment (venture capital) rounds, requires that angel investments provide a high return. Similar to getting connected with venture capital, companies meet angel investors by referrals, at investor conferences, and at pitch meetings organized by groups of angels.
Angels Provide More Than Money
On old Broadway, angels were the wealthy individuals who provided money for theatrical productions. Business has borrowed the term. Angel investors may be retired entrepreneurs or executives interested in mentoring the future generation and leveraging their experience and contacts without committing to full time employment. Many angel investors provide much more than capital in the form of advice and access to their powerful networks.
If you’ve run out of cash, but don’t yet need millions, you might be ready for an angel investor. And if you’re in Maryland, the Dingman Center might be able to help you out!