Launch Angels, with new leader, narrows focus to university alumni funds

Baker Memorial Library at Dartmouth College.
Baker Memorial Library at Dartmouth College.

Investment management startup Launch Angels was founded around an interesting idea: it could handle behind-the-scenes work for people who wanted to pool their money, solving the paperwork headaches that might keep new investors from taking the plunge.

So far, the idea has shown limited success. With a new chief executive aboard, the company is now betting that it can find a fertile market by focusing on groups of college alumni.

Thursday, Launch Angels says it is raising three new investment funds for investors and entrepreneurs with ties to Yale, Dartmouth, and the University of New Hampshire. The new funds piggyback on the launch earlier this year of the first Green D Angels fund, which raised $1.5 million from 44 Dartmouth alums and has already invested in 10 companies.

“You can feel when something really works and it catches on. And anytime you talk to anybody around this concept, their instant feedback is `Wow, that really makes sense,’” said Tom Kuegler, Launch Angels’ interim CEO. “I’ve been in the startup world way too long — 20-some years — and when you feel that something works, you just have to bet on it.”

The Yale- and UNH-focused funds will target about $1 million for their initial investment pools, similar to the first Green D Angels fund, Kuegler said. The second Green D Angels fund is expected to expand, and is targeting about $5 million to $7 million, he said.

The investors will be alumni of the individual schools, and the funds will focus on investing in companies with some ties to those universities too, Kuegler said.

“That could be intellectual property, if it comes out of a lab at Dartmouth or a lab at UNH. It could be a Harvard and a Dartmouth alum who are both 45-year-old guys on the West Coast — that’s great. But it has to be alums helping alums,” he said.

Launch Angels’ alumni funds are not affiliated with the universities and don’t accept investment checks from the schools, Kuegler said. Launch Angels has communicated with the schools in question and let them know it’s only trying to build connections between alumni, not use any of their trademarks or other property, he said.

“It’d be very hard for me to see how any university could jump up and down and say that’s a bad idea,” he said.

This new twist for Launch Angels follows a period of trial and error as it sought to apply its model to the increasingly popular world of private-company investment, particularly amid loosened investment restrictions through the federal JOBS Act and equity crowdfunding services like AngelList.

Launch Angels previously raised a roughly $1 million investment fund from veterans of Where, a Boston-based digital advertising company that was acquired by eBay in 2011 for $135 million. Former Launch Angels CEO Shereen Shermak had strong ties to that group through her husband, former Where vice president David Chang.

Launch Angels later tried to raise funds that would back women-led companies or startups helmed by lesbian, gay, bisexual, and transgender entrepreneurs. Those funds, however, did not find enough investors to move forward.

Shermak, who was previously co-founder of foreign exchange trading startup BuysideFX, left Launch Angels in February after the Where Angels fund had invested all of its money and is working on a new venture that hasn’t been publicly unveiled, she said in an e-mail.

“In many ways Launch Angels is a startup, so you learn, you pivot, and you learn,” Kuegler said. “What you learn is you need a strong affiliation to pull this off. And there are a lot of affiliations in the world but probably short of religion, there’s probably no stronger affiliation than what people have to their college.”

Launch Angels makes money through a traditional venture capital fee structure — 2 percent of the invested capital and 20 percent of any returns. The split that Launch Angels takes for its services can vary with each fund, Kuegler said, with the balance going to lead investors who will field the bulk of the investment pool from other alumni.