Southern California’s Tech Coast Angels (TCA) have made a new friend – the $3 million Seraphim Fund.
Closed March 31 with commitments from 51 individual investors and family trusts, the Seraphim Fund will invest alongside TCA in the same deals the group sources and funds.
The two went in together on San Diego-based Cargo Technology Inc.’s $2.1 million series B-1 round last week, with additional investments from Hamilton Apex Technology Ventures, E*Capital Corp., UPS Strategic Enterprise Fund and the Pasadena Angels.
Seraphim will invest in as many as 20 of the TCA’s deals, providing its limited partners with an index-like portfolio of startup companies.
“It’s estimated that there’s 1 million investors that dabble in funding startups,” says Ben Barak, one of the managers for the Seraphim Fund, from his offices in Irvine, Calif. “If they want to invest on a larger scale and diversify their portfolio, this is the way to do it.”
The fund will only invest, however, if at least 10 TCA members agree to put money into a deal, and together, contribute at least $350,000 to the round and one of them takes a seat on the company’s board of directors. TCA members invested $490,000 in Cargo Technology’s round of funding, while the Seraphim Fund contributed $130,000.
Barak himself sits on the TCA’s executive committee. He is a serial entrepreneur who sold his publishing business to Primedia in 1993 and now manages a hedge fund. Barak will manage the Seraphim alongside Andrea Sloan Pink, another member of TCA’s executive committee and the former general counsel to a DSL provider; and John Kensey, an entrepreneur who also founded Avalon Capital.
About 80% of the fund’s limited partners are also members of the TCA.
With its first deal done, no other one is nearly closed, Barak says. Nevertheless, he expects the fund will be fully invested in Southern California’s startups by the end of its three-year investment cycle.
“We’re working on the next one, and doing the due diligence now to invest with other angel groups,” he says.