Tech Coast Angels Forms New Fund to Make Collective Startup Investments

8/3/10Follow @bvbigelow

Southern California’s Tech Coast Angels (TCA) says today it is forming a new fund that will allow non-members to collectively participate in startup investments, a move that should add some firepower to TCA deals and could smooth out the funding process for entrepreneurs.

The formation of the Angel Capital Entrepreneurial Fund (ACE Fund) comes at a time when venture capital firms have been contracting—especially in San Diego—and angel investors have emerged as an increasingly critical source of seed stage capital. Former TCA chairman Dave Berkus, who spearheaded the effort, says the new fund offers individual, corporate, and institutional investors an opportunity to join in the wisdom of the TCA crowd—while at the same time providing low management expenses, a faster payback scheme, and improved liquidity.

In designating the first fund as “ACE Fund 1,” Berkus, a prolific angel investor in the Los Angeles area, obviously aspires to follow with a series of ACE funds.

Investing collectively through a fund, though, represents a departure from the way the Tech Coast Angels has operated since 2000, when the San Diego “Band of Angels” combined with the Tech Coast Angels, which was then operating in Los Angeles and Orange County. The organization, which is technically a nonprofit mutual benefit corporation, has expanded over the past decade to Santa Barbara and the “Inland Empire” of Riverside and San Bernardino, and counts more than 250 individual investors as members.

Usually, TCA members invest only as individuals. Members of each chapter typically meet once a month to hear startup presentations and conduct other business. With the ACE Fund, however, TCA members also can pool their resources and invest collectively in the same deals that are presented at chapter meetings. In other words, TCA members now can invest individually in a startup, or collectively through the ACE Fund, or both.

For the first time, the ACE Fund also will be open to investments from TCA non-member individuals (who qualify as high net-worth investors) and institutional investors.

At a presentation last month in San Diego, Berkus said the ACE Fund already … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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