Planned $30M early growth angel fund finding slow go in effort to raise money

BYLINE: Patty Tascarella

Startups hoping for funding from Pittsburgh Early Growth Partners LP will be waiting longer than anticipated.

The $30 million angel fund, which originally expected to start making investments by spring, hasn't begun to approach backers, let alone raise any money, said co-manager Stephen Robinson.

"We hope to have a first close in the third quarter," Robinson said, referring to the point at which a fund can begin to make investments. Robinson said the reason for PEGP's delay is simple: red tape.

"Because our (legal) documentation isn't done, we haven't been able to actively solicit or ask for a check," Robinson said.

The fund was created last year to fill a financing gap in the region for companies requiring between $1 million and $3 million -- too big for economic development entities, too small for venture capitalists. It got $2 million to start from the University of Pittsburgh, Carnegie Mellon University, the state Department of Community and Economic Development and Innovation Works.

Earlier this year, Robinson, of Squirrel Hill-based Robinson Venture Partners LP, and Edward Engler, of Downtown-based Summa VentureWorks, were tapped to manage the fund. They plan to approach investors and fund companies outside southwestern Pennsylvania.

"Our focus and desire is to invest as much of the fund as we can locally," Robinson said. "But we're not positioning this as a charity to our potential investors. We're out to make money, first and foremost."

However, hitting $30 million "will be tough," said Michael Matesic, CEO of The Idea Foundry, a South Side-based nonprofit that works with young companies. Idea Foundry tabled its plans to raise a $20 million fund earlier this year, due partly to the competitive environment, Matesic said.

He also believes the time frame it's set for investing is overly optimistic.

"I'd be shocked if they'd be in a position to invest at all this year because they went from absolutely nothing," Matesic said.

Wexford-based BlueTree Capital Group, which applied to manage PEGP, is raising a $10 million angel fund. Managing Partner Catherine Mott said her fundraising has been slowed by investors who stipulate geography and industry focuses.

"You don't want to go out and promise people things and then have to change (the original documents)," Mott said.