Much has changed since Cherrystone Angel Group in 2004 became the first angel investment vehicle to surface in Rhode Island, perhaps nothing so much as how prominent the entrepreneurial community has become in the region.
Robert Manning is chairman of Cherrystone Angel Group and has been a member since it was founded. Previously he was with Citibank and Citigroup for more than 25 years. As head of corporate finance for Citigroup in Japan, units under his supervision raised more than $50 billion in private market financing.
Peter Dorsey is executive director of Cherrystone Stone Angel Group and president of The Business Development Company, which provides capital to help companies grow in Rhode Island, southern Massachusetts and eastern Connecticut.
PBN: What exactly is an angel investor, and what is the benefit for an angel investor to joining a group such as Cherrystone?
MANNING: Very broadly speaking, angel investors are private investors investing most typically in early-stage companies. … Angels as a rule, [though] not always or exclusively, are members of angel groups. The purpose of the group is that it’s an organized place where companies who are looking for money can come and address a number of angels at one time. … It’s very labor intensive when you do it yourself, which is why people tend to migrate toward groups.
PBN: When do angels get involved in a startup?
MANNING: The angels typically get involved in what we call the “A” round of capital raising, which has a lot of nuance. Staging is hugely important. Companies typically go through a first stage of friends and family to build some of the initial stuff. Then they broaden out and begin to validate the sales and go for grant resources or early-stage government money. Then they get into a mode where they are going to start building out the company. That’s our sweet spot.
PBN: Cherrystone Angel investors collaboratively invest in the $250,000 to $500,000 range. Does every member invest in every deal?
MANNING: We use an individual participation model. Not everybody is in on every deal. … One of our members is usually the deal champion and is nominated to be a board member. They look after the investment on behalf of the Cherrystone guys.