Tap dries up as local investors wait out slump

First the good news —- there are plenty of deep-pocket investors out there willing to privately finance grand business ideas.

Now the bad —- just not in Atlanta.

For some reason, Atlanta’s angel investors believe this isn’t a good time to invest in fledgling companies and their innovations, investor guru Karen Rand said. But, she said, they’re wrong because they can get more return for their investments because business valuations are artificially low right now.

Rand wears a lot of hats in the investment arena. She’s managing coordinator for the Southeast Private Equity Conference, which met here last week, and president of Launch Funding Network. And she’s managing director of the Network of Business Angels and Investors.

“There’s plenty of money in Atlanta,” Rand said. “There’s a kind of funk going on where people [in Atlanta] are being influenced to fear the opportunities rather than embrace them.”

That has forced some Atlanta firms to seek financing outside of the metro area, Rand said. Angel investors typically run other companies or are retired executives with extra money they want to invest.

Just last week, the Southeast equity conference played matchmaker for some 150 investors and companies looking for money. The attendees, who came from as far away as California, mingled over drinks at 103 West in Buckhead the night before settling in to a day of pitching business plans.

What’s the investing climate right now?

Investors are making smaller investments now and doing more due diligence on projects, Rand said. They’re going after firms involved in the environment and alternative energy.

“It’s a good place for angels to play because there’s a lot of next rounds of financing due [from the federal stimulus package] in that area,” Rand said.

The real angel magnets, though, are companies that can get up and running —- and profitable —- with just one round of financing.

There was a flurry of angel investing a couple of years ago and then investors retrenched in 2008, she said. By the end of last year though, angels were back on the hunt.

“We had new investors coming in and investing, and we saw people who hadn’t been involved in a while return and looking at deals,” Rand said.