Diversifying Nevada's Economy Might Take The Work Of Angels
Do you have money to invest and a desire to help diversify Nevada’s economy? Startup NV wants to hear from you.
The nonprofit organization is holding an angel investor boot camp to introduce investors — especially those from minority communities — to opportunities in Nevada.
Organizers say the fragility shown by Nevada’s economy during the pandemic demonstrates the need to create jobs outside of the hospitality industry.
“Angel investing is a type of investment that puts dollars towards startup businesses as another way to diversify the economy,” said Myisha Williams, a small businesswoman and member of the Nevada Commission on Minority Affairs.
Williams said business owners around the state have realized that relying on one industry can be their downfall if that industry goes through a major downturn, as gaming and tourism did in 2020.
She said that everyone knows diversification is vital to the state, “creating a new and inclusive eco-system is one way to begin this journey and there is definitely need and opportunity.”
Startup NV is part of creating that new eco-system, she said. The program guides startup businesses from concept until they start producing revenue. Williams said the nonprofit provides mentorship, pitch preparation, and, eventually, an introduction to a network of potential capital partners.
“It builds a win-win venture capital network,” she said.
So far, Startup NV has worked with 18 startups and raised more than $68 million in three years. Williams said the nonprofit hopes to build on its early success, and it is getting support from other businesses, nonprofits and public agencies.
Williams said Startup NV is, at this point, an educational opportunity for people.
“This may not be the typical investment platform that you see," she said, "This is one that is recognizing that there’s not something available now, and it’s creating that. And it’s creating it at an entry point where folks can come in learn how to do this and build from it.”
Those in the investor boot camp will be asked to bring $5,000 to the table that will be pooled with other investors and then distributed to a startup of the investors' choice in late spring.
The idea, Williams said, is to bring startup businesses that have gone through Startup NV's education programs, and investors, who have done the same, together to jumpstart a new venture in Nevada.
Those interested in being part of the boot camp have to meet the Securities and Exchange Commission's angel investor requirements, which are having a net worth of $1 million or making $200,000 a year or $300,000 if someone is married.
“If you meet those requirements, and you have a cool $5,000, this is a great place to put it not only are you getting to put that money into an investment but you’re growing your investment network, which is new to the region and highly valuable, and two, you’re getting the education you can take that with you forever,” she said.
Williams is especially interested in getting people of color involved in investing. She said while many communities of color are behind in earnings, savings and liquidity that doesn't apply to everyone in those communities.
“Not taking this subset of ideal investors into consideration when building a new investment eco-system would be a sorely missed opportunity,” she said.
In addition, Williams said that while investors are focused on making a profit most tend to pick products, people and innovations based a personal connection or familiar feeling.
“I would make the case that if recruitment is homogenous then investments will be as well,” she said.
A growing bio-medical company that has already benefitted from the help of Startup NV is Heligenics. Its CEO Martin Schiller said the nonprofit was a big help.
“Startup NV was invaluable because they kind of did some pretty good coaching,” he said.
Schiller's company grew out of the Institute for Personalized Medicine at UNLV, which got some of its seed money from the Governor's Office of Economic Development or GOED.
The company isolates gene mutations that impact diseases and medical treatments. Then sells that information to companies studying specific drugs and diseases.
While much of the initial research was done at the institute, creating a business out of that research required investors, Schiller said.
“About a year ago, we got our first investment and then completed our round [of funding] a little later in the year," he said, "Now, we’re fully funded and have been going forward with our business and are already making money.”
While Schiller had taught science classes in an academic setting, pitching investors on a new biomedical company in a way they understood was a different task entirely.
After pitching 75 investors on the plan, he finally got one person excited about the project, and that person brought in other investors.
“Once we got the initial round of money, we knew that we were going to be able to do this pretty quickly and then all of our investors, from the initial investment, came back with more money and more friends and completed the round,” he said.
Now, the company has about 10 to 12 employees, a laboratory space that the city of Las Vegas helped it secure and several agreements with drug and medical research companies.
“I think our investors are going to be pretty happy within a year,” he said.
While almost everyone agrees that diversification is important for Nevada's economy, former Nevada Treasurer and current angel investor Dan Schwartz doesn't believe Nevada is going about it the right way.
“One of the reasons Nevada is kind of behind is, and as state treasurer, I opposed the $750 million that the state invested in the football stadium. That’s one reason why we’re not getting angel investing here is because the state is supporting football stadiums,” he said.
The former treasurer believes one of the biggest stumbling blocks for the state in drawing in venture capitalists is the "cultural climate" that favors gaming and not technology startups.
“I think it’s a cultural question of whether Nevada gets off of its addiction to gaming and entertainment and starts saying, ‘Hey, we need to diversify,’” he said.
He said the state has a great climate for business, including low taxes and no personal income tax, but it lacks the expertise and knowledge to build companies.
In addition to where the state decides to spend its money, Schwartz points to Nevada's education system as an obstacle to investing.
Schwartz has invested in a gold mine in Nevada but most of his other investments have been in national companies headquartered in California.
Myisha Williams, small businesswoman, member of the Nevada Commission on Minority Affairs; Martin Schiller, CEO, Heligenics; Dan Schwartz, former Nevada treasurer, angel investor