Nov
21
Minneapolis
debriefing

Finance

Sofia Angel Fund, targeting women-owned firms, nears first investment

Members of the Sofia Angel Fund were one conference call away from making their first investment late last year, when the target firm was acquired.

“It’s extremely disappointing” when that happens, says Cathy Connett, chair of the Sofia Angel Fund and founder of CorConnections, her St. Paul management consulting firm. “It was a good lesson, that you can’t wait around forever.”

The fund is on the hunt again for investments, having closed Jan. 31 with 30 members who contributed a total of $1 million.

The minimum contribution was $30,000, with additional units of $10,000 available. Connett organized it last year with Joy Lindsay, founder of local venture capital firm StarTec Investments. Connett says the full member list is not made public.

The fund targets women-led companies or companies with women as their primary market. They want companies with revenue but not necessarily income. “Not retail or restaurants or real estate,” says Connett. They’ll make investments from $150,000 to $2 million. She anticipates the fund doing 10 deals over three years.

The group votes on investments, with majority rule. Members may make side-by-side personal investments as well, and they may bring in other funds to invest.

To apply, business owners must be invited by a Sofia Fund member. They’re given a code to submit their information at www.rain-street.com. That’s the site operated by RAIN Source Capital, which is the umbrella organization for a network of angel funds operating throughout Minnesota. The Sofia Angel Fund is part of the RAIN Source Capital network.

“I like it because I get other people’s perspective. It significantly reduces the risk,” Connett says about the angel fund. She says few of the members knew each other before joining the fund. Each member has different areas of expertise and different comfort levels with the risk of investing.

“I’m comfortable with the risk, but I know some people have had to learn to be more comfortable,” Connett says.

She co-founded a group called W2W or Woman to Woman in 1998. “I was concerned with the lack of women in venture funding,” she says. People invested on their own and the group shared due diligence.

“By late ’05 we concluded that we had hit our wall and it was time to go to the next phase, and put together a formal fund,” Connett says. Sofia Angel Fund is that next phase.

Connett, who did her first angel investing in 1993, calls this her bottom line: “An investor wants to be able to see an exit, and a lot of entrepreneurs don’t get that.”

Cathy Connett, CorConnections and Sofia Angel Fund: 651.699.9614; cconnett@corconnections.com; www.corconnections.com; www.rainsourcecapital.com

Beth Ewen

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UPSIZE MN

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