Seattle-based investment group Alliance of Angels is gearing up to raise a new fund that will help support a new batch of startups across the Pacific Northwest.
The fund will be the third annual “Innovation Fund,” which AoA launched in 2022. It raised $1.3 million for the initial fund and $1.9 million for the second fund.
AoA expects to raise a similar amount or slightly more for the third fund and invest in around 14 companies, said Eric Larsen, AoA vice chairperson.
Founded in 1998, AoA is known for its network of nearly 200 angel investors that make individual investment decisions in up-and-coming startups.
The “Innovation Fund” added a structured investment vehicle that allowed AoA to move quickly when approached by entrepreneurs and make larger investments. It is also an annual fund, which lets new members join on a yearly basis.
“It’s been a big draw for new members joining Alliance of Angels,” Larsen said.
Investment decisions are determined by member vote. Returns are distributed on a pro-rata basis based on individual investment amounts.
Larsen noted that some members also invest in startups individually, beyond the fund’s participation.
The fund backs mainly companies based in the Pacific Northwest but also others across the U.S. and Canada. It’s sector-agnostic, though life sciences investments made up nearly half of the fund’s allocation.
Larsen said AoA has had better access to deals over the past 18 months amid the venture capital downturn as some investors backed off early stage investments.
Seed funding in U.S. startups fell 31% last year but was more insulated from the downturn compared to other funding stages, Crunchbase reported.
Seattle has long been criticized for its lack of local investment capital available for startups, especially relative to the region’s software clout and presence of tech giants. Techstars announced earlier this month that it is shutting down its Seattle accelerator program and focusing on cities with a higher volume of venture capital activity.
Larsen said he hopes AoA’s fund can help provide an onramp to people across the Pacific Northwest who want to dip their toes in startup investing.
“We set up the fund to instigate more due diligence among our investors and to help new angels make investments,” he said.
AoA recently brought on Katy von Kühn to help run the fund. She was previously executive director of Bellingham Angel Investors north of Seattle.
Initially started under the umbrella of the Technology Alliance, AoA spun out of the nonprofit in 2012. It has pumped more than $125 million into 200-plus startups, with more than 40 exits.
AoA last year merged with Puget Sound Venture Club, another longtime Seattle-based venture group.
