How To Turn Ordinary People Into Angel Investors

America's most entrepreneurial city

Think of America’s most entrepreneurial city. Chances are Kansas City didn’t come to mind,but that’s exactly what the city began calling itself to communicate the importance of building a startup community.

Kansas City, Iowa City, and Boulder, Colo., are just a few examples of organic startup communities that have all the ingredients of big tech hubs like Silicon Valley: a tight network of entrepreneurs and experienced mentors and the support of government, universities, service providers, and investors.

When a startup community forms, ordinary people begin to take an interest in entrepreneurship.

They see how startups create jobs, build culture, and generate wealth by bringing revenue in from outside the community. When community members feel invested in local startups’ success, they become entrepreneurs’ strongest advocates — and potential angel investors.

The Evolution of an Organic Startup Community

When I started a co-working meetup in Iowa City back in 2009, a strong startup community did not exist. I believed there must be other people like me in my community, and I was inspired by the co-working events that were happening in other U.S. cities. These meetups were the first time many people came out of their basements and began working alongside others, revealing the cool, creative things they were working on, and encouraging one another.

It turned out I wasn’t the only one who believed we could form a startup community in Iowa City. In the following years, others emerged who wanted to help. We held events, started a newsletter, and made a micro social network for people in the Iowa City area.

These years were a turning point for the community. Economic development groups stepped up, the city contributed, and three permanent co-working facilities eventually opened. Because of the support of the University of Iowa, we have a strong educational environment with connections to the business community. This environment supports numerous meetups, including Iowa City Open Coffee, IowaJS, Iowa Tech Chicks, 1 Million Cups, and a growing number of others.

Scott Heiferman, co-founder of, recently spoke in Iowa City and defined community as “just a bunch of people talking to each other.” This is fundamentally what the community-building efforts consisted of.

Our efforts over the first few years were focused solely on helping entrepreneurs. In the initial stages of community building, we knew a group of angel investors would eventually be part of the equation. Without a strong pipeline of startups, however, it didn’t make sense to focus on engaging investors.

Instead, according to the vision of mastermind community builder Andy Stoll, we performed what he called “Community Alchemy,” which consisted of identifying, promoting, and connecting current and potential entrepreneurs. During this time, entrepreneurs would occasionally complain about a lack of available capital, and investors would complain about a lack of good deal flow.

Our belief that startup communities must be led by entrepreneurs — and not investors or other organizations — was similar to Brad Feld’s. Because of this, we kept the focus on helping entrepreneurs become successful through mentorship, promotion, and encouragement. We did this for three solid years and saw a number of promising young startups emerge. They obtained funding and, after some time, we found ourselves in a position to form an open forum-style angel investment group.

How to Turn Ordinary People into Investors

In a community like ours, ordinary people were the key to getting companies off the ground with the funding they needed, but it couldn’t have happened without first helping entrepreneurs to build strong startups. The support of regular people is critical because community members who have money have the potential to become angel investors. Potential investors exist in any community, but to activate their full potential, you must inspire them to support startups.

Potential investors will be inspired by:

• The opportunity to help others in their community.

• The chance to diversify their portfolios through alternative investments.

• The opportunity to get involved with the process of starting a new company alongside eager, energetic entrepreneurs.

There are a few ways to foster the kind of environment necessary to inspire ordinary folks to become investors. Here are four steps to get you started:

1. Help entrepreneurs. Creating strong startups is the best way to inspire potential investors to become active investors. Focusing on helping entrepreneurs by mentoring, supporting, encouraging, introducing, and connecting will help turn mediocre startups into stronger ones.

2. Introduce entrepreneurs to mentors. Mentors can provide valuable advice that helps entrepreneurs build better companies, but there’s another benefit. When people start helping entrepreneurs in any way, they’re more likely to become financially invested in their success if possible.

3. Teach entrepreneurs to craft a good pitch. Many entrepreneurs don’t know how to effectively communicate the value of their opportunities to investors. Create a culture where investors are good at pitching — not just to win contests, but to effectively show the value of their startup to potential investors.

4. Educate investors. Investors need education, too. They need to know how to invest, do due diligence, and recognize a good investment opportunity. They also need to understand what expectations are realistic when making an alternative investment. Forming an inclusive angel group for accredited investors is one way to create an environment in which investors can learn from each other.

Building a community is a community effort. You need businesses, government, and universities to contribute, but no one can “own” this community. The unique thing about investing in a startup community is that it’s not a zero-sum game. As you help to build the community, the community helps to build you. Never forget that to be successful, it can’t be about any one person or organization. It must be about the opportunities created for everyone involved.

Josh Cramer is the founder and CEO of Cramer Development, a word-class Web and mobile application development company that helps clients create new businesses and products through ideation and technical services.

JumpStart Inc Announces Its Next Partnership, Heads to the Mid-South

Jumpstart Inc, Memphis startups, startco, partnershipsEECincyBannerJumpStart Inc. has an impressive record. Founded in 2004, they have grown an ecosystem in northeastern Ohio basically from scratch. The numbers look something like this:

  • $29 million in funding to pre-seed stage companies
  • 1000s of hours of human capital to more than 400 companies
  • 3,000 new jobs

In 2010 JumpStart received funding from outside sources to take the lessons learned in Ohio to other parts of the country. Since then they have partnered with 15 other regions to grow local startup ecosystems and create jobs. JumpStart’s approach involves working with local leaders to identify a region’s strengths and build from there.

They have a presence in regions like upstate New York, Baton Rouge, Detroit, and central Georgia.

And, now they’re coming to Memphis.

“After two years of discussions, we’re excited to kick off this collaboration with JumpStart,” co-president of Start Co Andre Fowlkes said in a press release. “Working with start co logoJumpStart further supports our mission of relentlessly building companies and founders for the advancement of Memphis’ entrepreneurial ecosystem.”

We write a lot about Memphis here at Nibletz. Part of that is because we’re based here, but it’s also because we believe in the possibilities in this city. Currently the city has a 9.5% unemployment rate, the highest of all metro areas of more than 1 million people. That number is pretty bleak, but entrepreneurs like ones that Start Co helps launch are a bright spot in the city.

Memphis also has a history of racial tension, which probably comes as no surprise. Yet the Fowlkes and co-president Eric Mathews know that to really pull Memphis employment up, everyone needs to engage. With their history in Cleveland, the folks at JumpStart have experience in reaching out to diverse groups of people and encouraging entrepreneurialism.

“2/3 to 3/4 of our talent isn’t even in the game,” said Mike Mozenter, President of JumpStart’s regional consulting arm, at a press luncheon yesterday. “How can that be good for any of us?”

So, how do JumpStart and Start Co plan to grow jobs in Memphis?

Like any good startup, they are still in the customer discovery phase of the project. Over the next few months, they will be talking to local leaders, universities, and entrepreneurs to begin to figure out what Memphis needs. At the end of the discovery phase, they hope to have a 5-year plan that will accelerate Memphis’ growth as a leading startup ecosystem.

The Accelerate Memphis Project hopes to secure at least $50 million in investment capital and another $15 million for technical assistance, support, and pre-seed investment money in the next 5 years.

Memphis and JumpStart are a natural partnership, and both expect great things for Memphis in the coming years.

Mozenter said in a statement: “We chose to work with Start Co because of their track record in supporting high growth technology startups in the Memphis market. Our organizations have complementary missions, and I have been impressed with the resources and support that Start Co offers startups.”

Check out the JumpStart Inc and Start Co websites to learn more about those organizations.


Building the Colorado Ecosystem Just Got a Little Easier

Startup Colorado Community Fund, startups, Colorado, FundingI went to a great event here in Memphis this week. Rather than the typical happy hour, the event started at 8–after work, gym, and dinner. (And, in my case, kids’ bedtimes.) It wasn’t focused on any one industry in the city, but rather on 20-30somethings across all areas. There was a great turn out, and lots of new connections made. The very thing a healthy ecosystem needs.

Now, the guy who organized it is very well-respected in Memphis, and it wasn’t hard for him to raise the money for the event and the next few coming up. But, what if Memphis were farther along in the ecosystem-building continuum? What if there were events every single day, hosted by multiple entrepreneurs and for multiple reasons?

According to Brad Feld, that’s exactly what’s happening in Colorado right now. In Boulder and Denver alone, there are often as many as 5 different events in a day. None of these are particularly expensive on their own, but as they scale, the entrepreneurs hosting them have to find money to pay for that. And with that many events in a concentrated area–well, there’s only so much money to go around.

That’s why Feld and several others are creating a $200,000 fund to help. In partnership with Startup Colorado, the fund with support “activities, events, and organizations in the Colorado startup community.”

Each quarter the fund will hand out grants to entrepreneurs organizing events for the community. Those grants will range from $1000-$25,000. This isn’t an investment or a loan. Rather, it plays into Feld’s Boulder Thesis and helps drive the things he believes are necessary for a strong ecosystem. The entrepreneurs who organize these events usually do it on the side; they are also busy building their companies. The grants from the Startup Colorado Community Fund will make it easier on them to also contribute to the state’s ecosystem as a whole.

The fund will offer grants across the state, but focus on Boulder, Denver, Colorado Springs, and Fort Collins. For more information, check out the video below and visit the Startup Colorado Community Fund website.


The Startup Colorado Community Fund from Startup Colorado on Vimeo.