Brent Batten: Calling all CEOs and angels

BRENT BATTEN

By design, consultant Jim McGraw’s strategic plan for economic development for Collier County is broad, leaving many specifics for local leaders to work out.

Many, many specifics. At least 500 million of them.

An eye-popping portion of the strategic plan speaks of a “capital investment coalition” that would raise $100 million a year for five years, money that would be available to invest in businesses that will drive the diverse economy of the future.

Who will put up that money? Who will decide who gets it? Under what terms?

Those questions aren’t answered in McGraw’s plan, which was commissioned as one of the last acts of the now-defunct Collier County Economic Development Council.

McGraw offered more insights in an interview. Other possible scenarios can be drawn from the plan and from efforts already underway in Southwest Florida.

McGraw mentions repeatedly the cadre of retired CEOs living in Collier County. He suggests they should be recruited in greater numbers to help the area distinguish itself as a pro-business mecca where new companies will form and existing companies will relocate.

They should be asked to not only solicit businesses and serve on boards of targeted companies but to personally invest money, the report states.

Retired CEOs with money to invest can already do so anywhere they wish. Why would they suddenly choose to invest in businesses specifically for the benefit of the Collier County economy?

Because, McGraw reasons, if successful people put their heads together they just might be in a position to do better than even professional investment managers. “The theory is, we have so many smart business people. If we can corral those folks, it’s going to accrue to the benefit of Collier County,” he said.

There’s no directory listing the names and addresses of retired CEOs, so McGraw says it may take a year or more of targeted networking to find the right people, but, he says, “We need to get some guys — and I know we can do this — who say, ‘I want to be part of the solution.”’

Another piece of the puzzle may lie in something called “angel” funds.

Tim Cartwright of Fifth Avenue Advisors, explains that in a typical investment fund, investors are looking only for a maximum return on their investments. That’s called single bottom-line investing. There is also something called double bottom-line investing, where the investors are looking for a profit, but also some other benefit, like improving the community in which they live.

Cartwright manages just such a fund, the first of its kind in Southwest Florida, known as the Tamiami Angel Fund. It is cited by name in the McGraw report.

Its goal is to raise as much as $500 million in capital to invest in new or emerging Florida-based companies in fields such as biotechnology and electronics.

Like the CEO-driven fund McGraw envisions, in angel funds the investors themselves decide who gets funded and who doesn’t. That means they don’t need to pay a high-priced manager to pick and choose investments. A fund manager is still required to work out the details of the investment and to keep the fund compliant with applicable laws, but the fee is much lower.

County government, while taking the lead in the overall economic development strategy, need not have anything to do with putting money into a capital investment fund or deciding where it would go, Cartwright and McGraw agree.

Anyone can start an angel fund and Cartwright doesn’t rule out the possibility that he might try starting one for the economic benefit of Southwest Florida. Others can do it too. Eventually there could be several funds, each focusing on a different type of business, fulfilling the role of the fund McGraw outlines in his plan.

Because they tend to be high-risk, such funds by law aren’t open to everyone. Only people with high net worth or with a lot of experience investing may participate. That makes the involvement of the successful CEOs all the more important. They’re the type of people the funds will have to tap if they are to come into being.

The trend in angel funds is for the investment to be made within a four-hour drive of the investors’ homes, Cartwright said. “You don’t want your money halfway around the world. It might be nice to drive out and see the management once in a while,” he said.

While the funds might limit themselves to investing only in businesses in Collier County or Southwest Florida, they wouldn’t necessarily have to.

A prototypical fund might be set up so 50 percent of the money raised will be invested in Collier County, 25 percent elsewhere in Florida and 25 percent in the rest of the country. That would give the fund the flexibility to take on great investments anywhere, yet still make a significant contribution toward the local economy.

The mere presence of a large investor fund based here would generate enough buzz in the business world to put Collier County on the map as a place genuinely interested in courting business, Cartwright said.

“That announcement would hit the radar screen of the entire country. People would say, ‘Wow, Collier County is really getting organized as far as investment capital. It would be a powerful news headline.”

Connect with Brent Batten at naplesnews.com/staff/brent_batten

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