San Francisco Business Times - July 7, 2003


Angel group model fuels expansion

Mark Calvey

The Keiretsu Forum, an East Bay angel group, is taking its show on the road with the launch of two chapters in Southern California, one in Canada and the promise of more to come.

Keiretsu is in talks with angel investors about creating chapters in Hawaii, Las Vegas, New York and Pittsburgh, Pa.

"We're not pushing out with any marketing. We're quietly being approached by other angels," said Art Monk, general partner with Meridian Executive Partners LLC and the Keiretsu member overseeing the expansion efforts.

The interest in forming Keiretsu chapters signals wealthy investors' growing desire to back entrepreneurs and suggests that they find the angel forum's model appealing.

"There's real value in the sharing and learning that occurs among members," said Randy Williams, founder of the angel group.

Keiretsu's model allows individual members to make their own investment decisions. Other angel groups create a structure in which investors put money into a fund, which is then invested on behalf of the group -- often by a vote of the membership.

The number of angel groups has tripled in the past five years to an estimated 170, according to Jeffrey Sohl at the University of New Hampshire's Center for Venture Research.

Keiretsu Forum, founded two years ago, has invested almost $23 million in 25 companies in a wide range of sectors, including technology, biotech, consumer products and real estate.

Some of the basic tenets of the Keiretsu Forum will remain in place as it expands to other cities, Monk said.

The angel group will continue to be structured so that investors write investment checks directly to the entrepreneur, letting each Keiretsu member decide in which companies they want to invest. Keiretsu will also continue its policy of not taking warrants or commissions on the money entrepreneurs raise from its members.

"We want investors to understand how a Keiretsu Forum chapter operates just as they would with a local chapter of the Rotary Club," Monk said.

Keiretsu established chapters this month in the Canadian city of Calgary, Alberta, and Long Beach, its second chapter in Southern California.

In addition to backing entrepreneurs, the angel group also pursues social activities and charitable initiatives.

For instance, the Keiretsu Forum Charitable Foundation earlier this year worked with the nonprofit Social Stimulus in launching an annual nonprofit funding competition designed to incorporate principles of running a successful business into the operation of a nonprofit.

The grand prize winner of $50,000 was Respond Inc., which will use the money to assist battered women and their children though the sale of CDs by well-known artists. San Francisco-based, which makes it easier for donors to give toys to needy children, and Rainn, which is building a national sexual assault online hotline, each received $25,000.

"There's far more to Keiretsu than finding investment opportunities," Monk said.

Mark Calvey covers banking and finance for the San Francisco Business Times.

2003 American City Business Journals Inc.

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