Bank of Ann Arbor

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Bank of Ann Arbor is aiming to take a central role in early stage equity financing in Ann Arbor. It helped found Ann Arbor Angel Investors to create a forum for potential angel investments. It offers two products to venture capital firms to help them better leverage their investment capital.

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Filed under: Ann Arbor, MI | Bank of Ann Arbor | Financing Innovation | Michael Cole

 When Michael Cole started The Technology Industry Group at Bank of Ann Arbor six years ago, he realized there might be a big opportunity in formalizing the bank's relationship with local area angel investors and venture capitalists. The bank was already informally connecting these investors with opportunities among its customers. 

Angels and venture capitalists require different products and services. Angel investors typically make early stage equity investments in companies totaling less than one million dollars. Venture capitalists make larger equity investments in companies they feel have a high likelihood in delivering large, outsized returns.

• For angel investors, Bank of Ann Arbor became a founding member in Ann Arbor Angels, a group that meets to discuss potential investments.
• For venture capitalists, Bank of Ann Arbor has recently launched two products:
  • Capital Call Lines of Credit: Venture capitalists typically get commitments up front from their investors and then make calls for new portions of the commitment as they make investments. The capital call line of credit allows VCs to make investments in between calls.
  • Venture Debt Financing: This is debt financing secured by a venture's assets and is typically made at the same time as a round of VC funding.

Additional Links:

• Ann Arbor Spark provides a listing of Angels and VCs in Ann Arbor.

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The Bank of Ann Arbor provides financing for early stage companies and has products for the equity financing community. In this segment, Michael Cole provides an overview of bank financing for companies. In making loans, one of the bank's paramount concerns is securing loan repayment.

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Filed under: Ann Arbor, MI | Bank of Ann Arbor | Banking | Financing Innovation | Michael Cole

Michael Cole, VP of the Technology Innovation Group at Bank of Ann Arbor provides our first overview of bank financing in our series on Financing Innovation. In considering banks, it is important to remember that each one is unique. They specialize in different types of business and therefore are more likely to make loans to some businesses than others. That said, bank financing is a more risk averse form of financing, focusing on assuring adequate collateral to cover a loan in case of default. Highlights include:

• Bank of Ann Arbor provides loans to early stage companies and also has products for equity financing targeted and angel investors and venture capitalists.
• Bank of Ann Arbor finances working capital at the rate of 80% of a company's receivables. In case of default, a receivable is much harder to recover than an asset like a building or a piece of machinery.
• In all loans, the bank's primary concern is how it will be repaid. It looks first to the strength of the cash flows and the business. Next it looks to assets that the company holds. Finally it looks to the assets of the business owner.