Nouveau Angel Capital Corp, the first public angel fund?
July 2, 2009
Michigan’s Great Lakes Angels President Rick Galdi says his phone has been ringing off the hook this week after the Crain’s Detroit Business coverage of his new cross-border venture, the Nouveau Angel Capital Corp.
While we’ve seen other attempts to create marketplaces to trade traditionally illiquid assets, Nouveau is a bit of clever cross-border financial engineering that seeks to repurpose an existing, structured, well-regulated Canadian financial instrument to connect small companies to public capital - the Capital Pool Company - but instead of raising capital, say, to hire a team of geologists to dig for oil, they’ll be digging for new early stage technology companies to invest in. Rick says the team spent 80% of the time vetting the instrument and only 20% doing the deal, motivated by their frustrations in trying to organize an angel group in Windsor and getting tech deals done in reasonable time. Nouveau will be based in Windsor, targeting investments in both Michigan and Canada.
While it seems unusual to “take a company public before it goes public”, there’s clearly precedent (e.g. reverse mergers, although a CPC is just cash - a “clean shell”) and a demonstrated need for greater liquidity which seems to exist just over the border where over 40 companies have gone public on the TSX Venture Exchange since January. TSX SVP Ungad Chadda has described the CPC program as “public bootstrapping” for small companies - or in Nouveau’s case, a vehicle to help close the early stage funding gap for startups.
They’ve just lined up their founding directors, and hope to file with the exchange and raise $2M by the end of August (hiring a broker to sell shares to 200 investors in Phase 1), after which they intend to raise $18M more through the sale of public shares after making their first investment.
Angelsoft’s Ryan Pipkin and I believe this will be the first effectively public angel fund - anybody know otherwise?
