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North Bay Business Journal

Monday, November 12, 2012, 7:00 am

North Bay Angels develops new ‘Flex-Mezz’ financing

Loan program designed for companies that need operating capital to get to next level

By Loralee Stevens, Special to the Business Journal

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    SANTA ROSA and NAPA — The North Bay Angels is going into the loan business and Napa technology company Visicon stands to gain.

    Che Voigt

    Dubbed Flex-Mezz, the flexible loan model is intended to help grow companies that slip through the cracks between equity investors and banks, according to angel investor Che Voigt.

    “Some companies are profitable and growing, but don’t plan on a sale to pay off investors,” said Mr. Voigt, founder of early stage investment company Crossover Ventures.

    “Others have not yet reached the volume and revenues that will quality them for debt financing. We wanted to reach these companies with a flexible loan program that will take them to the next level without taking a large bite of equity.”

    The current return interest rates are kept in the “generally low double digits, in line with similar types of financing,” he said, set so that both investor and recipient can make a profit. There can be a further upside for the investor if the company is successful in its growth.

    Just launched, the Flex-Mezz model has already aroused the interest of other angel groups, he said. It’s among several new programs started by the Sonoma County-based North Bay Angels (northbayangels.com), which is attracting new members and a wider variety of companies seeking investment funding.

    Visicon, the new model’s prime test case, typifies the company the Angels are targeting. The maker of highly automated machine vision systems for medical device manufacturers has a proven track record and is profitable and growing, but needed operating capital.

    Viscon sells its vision systems to makers of stents and other medical devices all over the world.

    “We were doing fine, with $1.2 million in angel funding from the North Bay Angels and two other groups,” said Visicon president and CEO George Linscott. But Visicon also needed to replace an $800,000 line of credit for operating expenses.

    The $450,000 loan extended by the North Bay Angels doesn’t quite replace what Visicon had before, but it’s a place to start, said Mr. Linscott.

    “It allows us to purchase the equipment we need and deliver in a timely manner, and that in turn allows us to negotiate with our customers,” he said. Visicon supplies its systems to all the major stent and other medical device manufacturers, both in the U.S. and abroad.

    The systems, costing between $70,000 and $300,000, are highly automated to keep Visicon out ahead of potential competition overseas, but they are expensive to assemble.

    “With sufficient operating capital we’ll most likely double our revenues in a year,” he said. Visicon is in the process of putting together a series B round of investment funding.

    “These loans are intended to advance companies to a higher stage of growth and put them in the position to obtain investment and/or debt financing,” said Mr. Voigt. “An important part of our strategy is making the company more attractive for follow-on bank financing.”

    For more information on the Flex-Mezz program visit www.northbayangels.com.

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