Angel Capital Group chapter fate uncertain in Memphis
By Milt Capps
The fate of the infant Memphis Chapter of the Nashville-based Angel Capital Group (ACG) is uncertain and the group has been closed, at least temporarily.
ACG founder and President Rachael Qualls, who announced forming the Memphis chapter nine months ago, told VNC that the Memphis chapter "did not gather enough interest" to continue. "When growing a company [a reference to for-profit ACG], you try some things that work and some things that don't. It just didn't work," Qualls said.
Qualls said Tom Davis, who is CEO of arGentis Pharmaceuticals, remains de facto president of the shuttered ACG chapter. Quall added, "Should we regain momentum, we will gladly reopen the chapter." Davis said the group had not been able to recruit the 10 Angels it needs to be viable but would continue recruiting, according to a Sept. 30 report by Memphis Business Journal.
A potential ACG competitor, the Memphis-based Mid-South Angel Network (MSAN), was formed by principals of Innova Memphis and Memphis BioWorks Foundation a year prior to the ACG's formal Memphis entry.
Innova President Ken Woody declined comment on ACG/Memphis for this story. When asked about MSAN's progress Woody said, "It's actually working very well. We just keep it low-key. We're not advertising for members but there have been a number of con-investments with Innova." The MSAN was formed partly to facilitate Angel investors' co-invested with Innova Fund II, a TNInvestco-certified fund.
Eric Mathews, a Memphis veteran of numerous local and statewide entrepreneurial and civic initiatives, said part of the problem ACG faces might stem from Memphians' long-standing wariness regarding ideas or businesses coming into town from elsewhere, a trait Mathews said might be a result of Memphis' role as "a riverboat town" in earlier eras in which "anybody could hop off a boat and peddle something." That might lead locals to distrust "an outside group taking the lead on formation of a local angel network," he added. Mathews volunteered that risk aversion and lack of familiarity with angel investing might also be deterrents.
Material published online indicates that ACG requires Angel members to pay a flat $5,000 fee for membership each year. Online material about Innova-sponsored MSAN indicates its members are expected to invest $20,000-$50,000 during each two-year period.
Innova's portfolio page indicates athat arGentis Pharma, led by ACG's memphis chapter president, is an Innova portfolio company. In 2010, arGentis said it needed $12-15MM as it approached further clinical trials for its scleroderma therapy, according to the Memphis Business Journal at the time. VNC research located no announcements of any such raise having been completed. arGentis' co-founder and COO Ted Townsend recently accepted a position as a regional director of the Tennessee Department of Economic and Community Development.
ACG management, in addition to Qualls, includes Managing Partner and Nashville Chapter President Richard "Chip" Potts, who is CEO of Seanache Holdings, a real-estate company; and, Managing Partner Jason Denenberg, who among other duties has handled some legislative affairs for ACG.
The group's website says its advisory board include Jimmy Johnson, CEO, Forward Sumner; Michael Burcham, president-CEO of Nashville Entrepreneur Center and designated CEO for Startup Tennessee; Saurabh Sinha, CEO, eMIDs; Don Birdwell, CEO Keller Williams Market Centers; Paul Ney (former Metro Nashville ECD director), Waddey & Patterson; Clyde Bright, CPA, president Collingsworth Bright; and, Yogi Dougher, who is a partner (inactive) with ACG and is a fulltime VP for commercial banking with US Bank. Dougher was brought in as a co-owner in ACG in 2009.
ACG in 2009 announced appointment of Roger Kiger to be its Knoxville area managing director, but Kiger, who worked part-time with ACG while maintaining his own wealth-management practice, is no longer associated with ACG, according to his LinkedIn.
Angel Capital Group was in 2009 successor to Angel Network of Sumner County, majority owned by Qualls, who also operated Qualls Management Group.
In August 2007, Qualls told this reporter that some ANSC angels were investing in Pathfinder Therapeutics and in Universal Robotics. VNC