Investors flock as Keiretsu Forum comes to Tacoma

You’ll need $1 million in assets not counting your home or else you’ll need to be earning an annual $250,000 to be accredited as an investor, and if you qualify — and if you have a high enough tolerance for risk — then you are welcome to apply.

The Keiretsu Forum has arrived in Tacoma.

That’s where money meets the chance for more, where entrepreneurs seeking funding pitch their ideas and their companies to investors who may or may not choose to invest.

“We’ve been watching Tacoma. It’s a vibrant city,” said Sherry Zins Calvert, president of Keiretsu Forum Northwest, a regional division of the larger Keiretsu family of investors.

Calvert hosted the local group’s second South Sound meeting last week at a downtown architectural office.

She needed extra chairs to accommodate a crowd of some 60 investors, guests and presenters.

ART OF THE DEAL

Where the Tacoma Angel Network — the city’s first investor forum — might welcome a pitch from an early-stage business, Keiretsu typically seeks presentations from companies and entrepreneurs who have already established some basic business bona fides.

After paying a fee, the entrepreneurs make a brief presentation to potential investors who are then free to participate or not.

Take Evan Tree, CEO of a company called ProdataKey. He attended the meeting last week seeking investors for what the published program called “the leading wireless access control platform in the security industry.”

In his 10-minute presentation, Tree explained that his wireless security system is cloud-connected and allows access to door locks and such from remote locations. He named a city, a truck manufacturer and a major Midwestern university as customers. He named the competition. He said he was looking for $1.5 million to take ProdataKey to the next step.

The potential investors had questions: What about intellectual property? Encryption? Follow-on products?

Someone asked, “How do you make money?”

And someone else: “What do you need this money for?”

With answers provided, Tree was asked to leave the room while the group discussed what they’d heard.

And so it was with each succeeding presentation — with “Machi.na,” a “cloud-based analytics engine;” with Zip-Stitch, a surgical-closure product; and with Ninja Metrics, a software company that offers access to an algorithm that assesses “social value.”

Along with pitches, presenters also offered updates on previous presentations, with Adam Trexler of Valaurum discussing a new system of gold ownership and Peter Gray of CardioThrive describing a portable automated external defibrillator about the size of a smartphone.

PLAUDITS, fINE PRINT

“We’re on the map,” said John Rodenberg, a certified business adviser with Tacoma’s Small Business Development Center at Bates Technical College.

“These guys are great,” he said of the Keiretsu team. “It’s a real professional organization.”

“It means a lot for Tacoma,” said Calvert, who owns the Keiretsu Northwest franchise. “We’re going to be bringing deals from around the world. It’s a natural fit.”

“I find it to be interesting, exciting, with young companies,” said Walker Allen, a retired university administrator from Gig Harbor.

“I think the process they go through is exceptional, the due diligence,” he said.

Allen said he was seriously considering becoming a member of the group.

As was Andy Stokes, a Tacoma recording artist.

“I’m looking to learn how to invest money, what to look for,” he said. “I’ve been interested and intrigued, and amazed about how smart these people are coming up with their ideas. Some day, I will definitely be in the Keiretsu family. My ears are open and I’m listening.”

For the privilege of joining, investors pay a fee of $3,000. For that they are given access to all deals offered throughout the Keiretsu Forum network of 43 chapters.

Calvert cautions that investors will lose money during the first year of their investment and should not expect a return for five years. She boasts an average eventual return of 28 percent over a five-year period. Individual investments, she said, will typically fit into a range between $20,000 and $100,000, and for the less adventurous, there is an opportunity to join a fund that bundles groups of companies, although the returns will generally be less than for the more risky single-company investments.

Companies wishing to present should have been in business for at least a year and should have a completed product or service to help prove an investment’s viability. After a rigorous screening process and completion of a due diligence report, companies pay a fee of $9,500 in order to meet with investors.

“Once we accept them, it’s our job to get them funded,” Calvert said.

Last year, she said, 78 percent of accepted companies received some level of funding from investors.

And last year, 57 Northwest companies received $43.5 million from Keiretsu investors.

CRAZY THINGS

Calvert said her own first investment went to a company that produced kitty litter, and her one regret has been not funding a treasure hunter who had access to a sunken ship.

“We’ve seen some crazy things,” she said.

The majority of investment opportunities, she said, come from the real estate, medical device and technology sectors.

Investors include physicians, attorneys, bankers and retired persons, she said.

Beginning the process of selecting proper presenters, Calvert said she reviews 100 deals every month. Optimally for the monthly meeting, she prefers to present two local deals and two from outside the area. Committees review potential pitches and will decide either to allow presentation, delay presentation or note that investors would be unlikely to fund the company. Between seven and 10 of all reviewed deals will pass the initial screening.

“I think people see an opportunity — the Tacoma area as a fruitful place for businesses to set up,” said investor and five-year Keiretsu member Richard Samuelson of Gig Harbor.

“This is becoming a more attractive place. There is a wealthy community here to merit setting up a chapter,” he said. “When the idea was first put forward, I encouraged them to set up here. I’d say this area probably has more potential than Portland, just in terms of the number of investors you can attract.”

“This is a very close community,” Calvert said. “They all know each other. It’s old money.”

Which does not preclude attracting the new money.

“Everyone is welcome,” Calvert said. “Just let us know.”

This story was originally published March 13, 2016 at 4:47 PM with the headline "Investors flock as Keiretsu Forum comes to Tacoma."