Megan Milligan has always been excited about empowering women. Now she’s leading an initiative to develop and equip a network of accredited female investors to become angel investors. 

The initiative, called FIN Capital, will invest primarily in women-owned businesses and, Milligan hopes, become a growing circle of influence for high-wealth women investors in Iowa. FIN is an acronym for Female Investor Network.

Milligan is president and CEO of the Iowa Center for Economic Success, a nonprofit that helps Central Iowans start and expand their own businesses. Creating an angel investor network takes the group in a whole new direction. 

The network is seeking, for the most part, highly educated women, many of whom have run their own companies and have their own wealth, but who don’t know about angel investing, Milligan said.

“The last place they want to go and let their guard down and show their vulnerability is in a group where everybody else already is doing it,” she said. “So we’re taking a group of people and starting everybody out in that same place where they’re exchanging ideas and swapping stories, where there’s not that stress of having to catch up.” 

Through a partnership with West Des Moines-based River Glen Private Capital, the women in FIN Capital will have access to a woman-led firm with qualified, experienced investment professionals who focus on identifying, vetting and monitoring private capital investments in seed-stage to early stage companies. 

The group also plans to partner with an existing Central Iowa angel investor network, Plains Angels. Members of Iowa Angel Network will participate to some extent in Plains Angels meetings, and the hope is to have several joint meetings annually with Plains Angels investors as well as other angel investor groups, Milligan said. 

‘Definitely a transition’ 

The spark for the new angel network came after Lt. Gov. Kim Reynolds and Iowa Economic Development Authority Director Debi Durham visited a women’s angel investor network in Kansas City called the Women’s Capital Connection. Shortly after that, Durham and Reynolds arranged a meeting with Milligan. 

“When Debi Durham first came to us with this idea, it was definitely a transition to go from thinking about entrepreneurs exclusively as our clients to thinking about investors as our clients, which is really what this is,” Milligan said. “So there was a lot of conversation by the board at first: Does this fit our mission to look at investors as clients versus small business owners? 

“Our mission is to ‘empower Iowans with the potential to succeed as they pursue opportunities for financial success,’ so it’s completely within the letter of the law of our mission to help people grow their wealth through investing,” she said. “It was an unexplored avenue.” 

The Iowa Center for Economic Success, formerly known as ISED Ventures, has undergone a significant change in direction over the past three years as government funding sources and leadership have changed, Milligan said. So the board was careful in considering whether to add a new program after it had cut back on numerous initiatives. 

The state is providing funding to help jump-start the initiative. In late December, the Iowa Economic Development Authority board authorized $175,000 in funds for the initiative.

The money will pay for staffing, for the cost of conducting education forums and for memberships to various angel network groups, Milligan said. “This isn’t long-term funding, so we will have to work on making sure we are sustainable,” she said. “Part of that will be through membership dues, part of it will be through fundraising, part of it will be through sponsorships.” 

Finding ambassadors 

Taking her cue from how the Kansas City network was launched eight years ago, Milligan began seeking a core group of women to serve as founding members who commit to being the core group of accredited investors. 

“A lot of us do things because they’re the right thing to do, but also because the right person invited us,” she said. “So having these ambassadors out there, spreading the word about what we do and inviting people to join, then we build that larger network of people who aren’t just committed to an idea, they’re committed to the people. That’s what makes it a network versus just a bunch of investors seeing their portfolio on the same day.” 

The eight founding members will serve a minimum one-year term on the organization’s steering committee. 

“They will play a critical role in helping shape this network and its evolution,” Milligan said. “They also play a critical role in recruiting for our general membership.” 

By mid-April, FIN Capital had a list of more than 100 candidates for general membership, with a goal of identifying 25 accredited female members by the end of the year. 

FIN Capital plans to hold general recruitment events in June and July and to conduct a kick-off event in September. 

Professional management

“Women are fully capable of making smart, sound investment decisions,” said Heather Welch Puri, managing director of River Glen Private Capital. “RGPC is excited to work with (FIN Capital) and be part of an initiative that will empower female angel investors in Iowa and provide them with opportunities to support and grow promising local businesses.”

In addition to being involved in the due diligence process, RGPC will be part of the committee that votes on various investment opportunities, she said: “We will take those accredited investors and bring them into our whole process, and manage (the investments) on an ongoing basis until there’s a liquidity event (a sale or initial public offering).” 

Since mid-2010, RGPC has invested just under $7 million across nine early-stage companies in Iowa and Minnesota, through six different pooled investment limited liability companies. By offering its pooled funds structure to the network’s investors, RGPC will be able to negotiate more favorable investment terms on the network’s behalf, providing a significant advantage over individual angel investors, Welch Puri said. 

The investors will be charged a competitive management fee that will be deferred until the investors have received back their investment, she said. Additionally, there will be a low buy-in requirement, which will enable the network’s women angels to invest at an amount significantly less than the typical private placement investment minimum. 

Heidi Wessels, a project management professional and a former executive director of Neighborhood Development Corp., will manage the day-to-day operations of FIN Capital as director of advocacy and networking. Among her responsibilities will be member recruiting, data processing and curriculum development. 

“I have been familiar with the mission of the Women’s Center (at the Iowa Center for Economic Success) for some time,” said Wessels, who previously taught at the center.  

Milligan noted that the network will also provide learning opportunities for women who haven’t yet reached accredited investor status. However, “any time we’re actually meeting for a pitch, then only accredited members of the network will be able to part of that conversation,” she said. 

The exposure of Iowa Center for Economic Success entrepreneurial clients to its new angel investor clients will be valuable as well, Milligan said. 

“This is a step-up on both sides,” she said. “Most of the entrepreneurs we work with are at the very early level; none of them will be pitching to this group because they’re not qualified. Those businesses using our micro-loan program, they’re a little closer to that stage of angel investing.”

The more you have people from each of these arenas rubbing shoulders, the more each can see the possibilities of collaborating, Milligan said. “Not because she read about it in a magazine, but because she saw that woman (investor) come into this building,” she said.

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Kansas City network could partner with Iowa group 

The Women’s Capital Connection, which recently finished its eighth year, currently has 48 female accredited investors from the Kansas City area. 

“I’m thrilled about the Iowa Angel Network,” said Kelly Pruneau, network manager for the Women’s Capital Connection. 

Pruneau noted that most angel groups, after they get to know one another, will share deals, because most of the time, one group can’t fund an entire deal that might be $1 million or more. 

“That would just be awesome if we could look at deals there and syndicate and help a woman entrepreneur get all the money she needs,” she said.

Over the past eight years, the Kansas City-based group has made 21 investments in 15 companies, including second-round investments in six of them. One of the businesses, animal health company Aratana Therapeutics Inc., launched an initial public offering in 2013 and was their first company to exit. Only one of the companies has gone belly up. 

As a group, the network has invested between $100,000 and $400,000 per company, with individual investors staking between $10,000 and $70,000 per investment. 

“One of the big things to realize is that these are really early stage ventures,” Pruneau said. “You hope you pick wisely as to what you invest in, but you really do invest in the entrepreneur — can the entrepreneur execute on that great idea? That’s what we invest in — that they’ll be able to execute 
on that idea.”