Plains Angels Early Stages Fund is managed by Tej Dhawan, left, and JD Geneser.
By Steve Dinnen
A new venture capital fund has opened in Des Moines, with plans to funnel money to startups across the state and, with any luck, make some money for investors.
Plains Angels Early Stages Fund intends to raise $6 million, or even up to $15 million if buy-in from investors goes exceedingly well. The fund is being managed by Tej Dhawan and JD Geneser, who have years of experience in venture capital and helped launch Plains Angels Investors in 2012. With the new fund, they hope to capitalize upon their earlier Plains Angels success.
The minimum buy-in price is $50,000, available only to accredited investors. Organizers said an initial payment of $5,000 will be followed by capital calls on an as-needed basis.
Their intent is to divide their pot into three pools. The first ($1.2 million) is meant for investments of no more than $50,000 for what they consider to be “promising companies in their pre-revenue stage.”
The second pool ($1.8 million) is aimed at early revenue companies that have patents (issued or pending) and are building out their management teams. It will provide funding of up to $100,000.
The third and largest pool ($3 million) will be spent on companies that have developed ongoing streams of revenue but have not yet attracted money from larger venture capitalists. The size of these investments there will vary.
There’s no shortage of opportunities to deploy this capital. Dhawan said the 2012 Plains Angels venture receives nearly 200 funding requests every year, and those requests can simply be turned over to Plains Angels Early Stages. Since Dhawan and Geneser have been involved in venture capital for more than a decade, they know where to look for opportunities. And they know that, by now, people trust them for opportunities.
Since this is Iowa, agricultural or insurance-related businesses are likely to pop up on the list of opportunities. The new fund’s founders aren’t especially interested in retail or real estate. For reference, some successes with the earlier Plains Angels project include a pet insurer and a company that has developed an algae-based system for wastewater treatment.
With venture capital, you lose most of the time and hope the winners carry you through to overall profitability. Dhawan said that in the case of the original Plains Angels fund, 12% of its investments failed outright, 12% have returned capital in various multiples, and the remainder are ongoing operations.
Nationally, contemporary models for long-term venture funds indicate that about a third of investments fail outright, while a third return one to three times the invested capital, and the final third show a return of three to 10 times the invested capital.
