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posted: 7/5/2013 11:49 AM

What happens when angels, companies needing capital meet

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The bringing together of fledgling businesses needing capital and individuals with money to invest is often something of a mystery to entrepreneurs. That's why I was pleased to accept an invitation to sit in last month when Chicago-headquartered AllCell Technologies LLC made a presentation to the very new Collar County Angel Network (CCAN).

The invitation came from Ron Kirschner, an experienced angel investor whose Skokie-based Heartland Angels Inc. private equity network has a 10-year record of success.

AllCell is hardly a fledgling. The company was nearly five years old when I first wrote about it in 2005, when co-founders Said Al-Hallaj and J. Robert Sellman made a presentation to Heartland. At the time, AllCell was looking for $500,000.

Now, however, AllCell seems ready to hit the marketplace. With several successful financing pitches covering the intervening years, AllCell executives Jake Edie and Jeremiah Schatt last month were looking for as much as $4 million, a combination of working capital and funds to expand the sales-marketing team.

The company focuses on lithium-ion batteries, different applications but batteries conceptually similar to the ones whose heating issues have bedeviled Boeing Company's 787 Dreamliner commercial aircraft. AllCell's patented thermal management technology apparently has solved that problem, at least for the smaller units AllCell is developing.

AllCell is targeting electric bicycles -- between 1.5 and 2 million are sold in Europe each year; scooter fleets, where batteries can be easily swapped between charging stations and vehicles; and renewable energy storage systems.

CCAN, on the other hand, is a still-organizing group of qualifying investors. (Members must meet Securities and Exchange Commission definitions of accredited investors.) At the moment, there are five CCAN members, including two who joined following the AllCell presentation June 25. About 15 investor-types attended the meeting, hosted by Leaders Bank in Oak Brook.

"Everyone liked (the AllCell presentation)," Kirschner said. "I would guess 40-50-60 percent will join (CCAN) and invest." Kirschner expects "a good feeling for the group's interest" in AllCell by CCAN's August meeting.

CCAN's approach is to combine amounts members are willing to invest and make one lump-sum investment in a presenting business.

Nearly every potential investor asked questions; several asked several. Among the questions, in no particular order but listed here because they are representative of what other entrepreneurs might be asked in a similar setting:

• What's your burn rate? In other words: How fast is AllCell going through available funds? And a related question: When do you need the new money?

• What will (our investment) be used for?

• When will the company reach break-even?

• AllCell is a small company with limited production capacity. How will you manage potential new demand?

• Like other investors, angels want their money back -- with growth. Thus many questions centered on the end game: When does a bigger company acquire you? What is the exit number? What will it take for a bigger company to buy you out? When might that happen?

• Jim Kendall welcomes comments at 2013 121 Marketing Resources Inc.

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