How Angel Investors Support Local Economies

A Thought Leader Guest Post from Girard Miller of Tech Coast Angels Orange County:

An Overlooked Resource for Rebuilding Local Economies: Angels

Locally focused investors support the innovative entrepreneurial ecosystems that will produce high-paying jobs in the post-pandemic world. Public officials can learn a lot from their angel investors.

While the news media and public officials focus on COVID-19’s devastation of small businesses and double-digit unemployment, there’s a sector of the economy that’s already setting up for the post-pandemic economic wave. It’s the world of startups led by bold, innovative, talented entrepreneurs and supported by local investment “angels” — individuals who use their own money to provide the seed capital needed to keep the lights on and cover payroll in a startup’s earliest stages while advising and steering management.

Most elected officials, city and county managers, and finance officers probably have heard the term “angel investor.” But they often confuse angels with venture capitalists, companies that pool money from pension funds, corporations and other large investors and typically step in later in the business development process. VCs are much less likely to be motivated by concerns about local investment. They’re looking to invest multi-millions, not just five figures, wherever opportunities lie. Angels provide the early stage, local startup money and take bigger risks of wipeouts.

My interest in angels is both professional and personal: I’m a member of several angel investment groups in my community of Orange County, Calif., and one thing I’ve learned is that very few in government put in the time it takes to meet with nearby angels, find out what they are doing, and help them build a local ecosystem that fosters business innovation and the high-skilled, high-paying jobs that will support their tax base of the future.

Pundits say that the economy’s next “new normal” will be different. Yet in the world of economic development, I don’t hear much about strategic thinking — and most importantly, outreach — to identify new growth drivers at the local level. But that’s what local angel investors are all about, and here is a sampling of the diverse opportunities that they are screening every day:

Gig platforms: With layoffs in the tens of millions as the pandemic continues to devastate business large and small, many workers will lose their jobs permanently and be thrust into the gig economy. The angel money is actively seeking opportunities in the tech platforms that support and promote these workers. Think about services that folks need and want that require high levels of personal trust yet...