St. Louis, Missouri (January 16, 2004) - There are an estimated one million angels in the United States, yet one of St. Louis' most promising life-science startups is finding most of its angel investors outside this region.

So, on one hand, it's great news that Divergence Inc. closed on more than $4 million in new funding, one of the largest rounds of angel investing in St. Louis. On the other hand, it's worrisome and symptomatic of other issues that much of the money came from investors primarily in Chicago. It's an impressive roster that includes former Merck CEO Roy Vagelos, who once chaired the biochemistry department at Washington University.

The reason to be concerned about the geographic origins of Divergence's backers is that usually angels -- those who give early round funding to new companies -- generally invest in companies within driving distance from their own interests. The reasons are twofold: Investors often back people they know and, just as importantly, they like to keep an eye on what's happening. If Divergence's Chicago board members demanded the company move to, say, Oak Park, company leadership would be hard-pressed to ignore the order.

That Prolog, a St. Louis-based venture capital firm, is Divergence's largest single investor certainly balances the company's Illinois investors, but it doesn't obviate the need for more local angels and a meaningful angel network.

The angel profile, if you will, is typically a business owner between 40 and 55 years old, with an annual income of $90,000 or more and a minimum net worth of $1 million, according to businesspartners.com.

About 60 percent of the investments are $50,000 or less; the remainder are in the $50,000 to $500,000 range. There are estimates that there is one angel for every 250 adults. Presuming about 1 million adults live in the St. Louis region, there should be 4,000 angel investors. Even if that number is outrageously optimistic, there should be at least 2,000, or 1,000 … enough to raise $4 million for Divergence, a company that has drawn the attention of top pharmaceutical executives who are investing on a personal basis.

Bob Calcaterra of the Nidus Center, the bioscience incubator that not coincidentally houses Divergence, is going to try to establish an angel network in St. Louis. Again.

Previous attempts have faltered. It's not that this community lacks resources -- either intellectual capital or investment capital.

Collaboration, however, has never been our strong suit, with the chief exception of the recent biotech initiatives. Both the Danforth Plant Science Center and the CORTEX initiative along Forest Park Boulevard have brought together all the major universities as well as Monsanto, the Missouri Botanical Garden, the Danforth Foundation and others. Hopefully these collaborative efforts can serve as a model for a new angel network.

Angel investors need one quality more than any other: patience. However, St. Louis hardly can afford to wait much longer to establish a meaningful angel community.

RELEASE: ©2004 St. Louis Business Journal