By Jay Gonzales
The concept of angel investing has always had a touch and feel to it for the investors who are taking a chance on a new technology that might be worthy of the risk of thousands, even millions of dollars.
But as the COVID-19 pandemic put the clamps on in-person meetings over the last couple of years, the Desert Angels, a 22-year-old local angel investment group, had to change its dynamic to be able to keep supporting companies who are trying to get their innovative products to market.
The basic premise hasn’t changed, said Desert Angels CEO JoAnn MacMaster, who was hired by the group in 2020. Desert Angels members are looking for opportunities to support new companies and, in the end, make money.
“The important connection is between the investors and the founders, and, of course, the investors and the investors,” MacMaster said.
Out of necessity, the Desert Angels had to do more business online and engage through an online platform to keep a flow of information and, thus, opportunities for the investors and the companies coming to them for investment. As a result, MacMaster said, angel groups across the country are in more communication with each other and they’re learning a lot from each other.
“The depth and breadth of what we see and how we connect with other angel groups around the country has completely changed,” MacMaster said. “Suddenly (members) see how the process works at other angel groups around the country, and they’re finding really great opportunities and bringing those back to us.”
But still, there are plenty of great opportunities here that are at various stages of the funding process. MacMaster said the Desert Angels invest an average of $4 million to $6 million a year. In 2021, they invested $4 million in 15 deals.
The importance of this kind of investment being available locally cannot be overstated, said Richard Austin, CEO of Reglagene, a company developing an innovative brain cancer treatment that is an alternative to invasive chemotherapy.
“We would not have a company” without the Desert Angels, said Austin, a scientist who also is a Desert Angels member. “The philosophy we went in with was, you have to win at home before you can win anywhere else. If we couldn’t get backing in Tucson, there’s no reason for people in California or Texas or anywhere else to write a check.”
Getting funding from the Desert Angels sometimes comes with the added benefit of expertise to run the business. Like Reglagene, RxActuator, which has received Desert Angels funding, and RaeSedo, which is in the funding process. Both have Desert Angels members among their lead management.
Mark Banister, the inventor of a wearable pump that can efficiently inject medication in animals, knew Harry George long before the two took the technology to the Desert Angels. George is an accredited investor, a Desert Angels member, and now chairman of the board for RxActuator.
“Basically, he’s helping guide the company,” Banister said. “Also, whenever we need to do another (funding) raise, Harry’s the point man on that.”
“I helped with the business plan, and I reached out to the investors that I’ve worked with in the past,” George said of his role in helping to raise about $2.5 million so far with about half of that from the Desert Angels.
Mike Sember said he knew right where to go when it came time to securing the funding that would allow RaeSedo, which is developing an asthma treatment, to move its product to the next step. The technology is the brainchild of University Arizona scientists Julie Ledford and Monica Kraft.
“From the very beginning with this company, I never thought of going anywhere for money other than grant money,” said Sember, a longtime entrepreneur in the pharmaceutical industry and also a member of the Desert Angels.
“The easiest gateway is to work with your local angel group,” Sember said. “The more that we − the angels − can support these local companies the better the quality of what we will see from an investment perspective. It’s feathering our nest as well as feathering the nests of the companies.”