HELP WANTED: ANGEL; FORUMS MATCH YOUNG COMPANIES WITH INVESTORS.

Byline: Enrique Rivero Daily News Staff Writer

For Adventure Components Inc. President Tony Pellegrino, the perfect business mate is an angel.

Companies in high-tech heavy Northern California seem to have no trouble finding investors - particularly of the large, institutional variety - willing to risk their money on promising or successful ventures.

But it's a different story for local businesses, which find it harder to come by investment money and often rely on organized forums to match them up with investors - either institutional or individuals commonly known as angels - with cash to invest.

``What I'd really like is to get one person involved - an angel who could not only be the money part of it, but the advice part of it,'' said Pellegrino, whose Westlake Village company makes parts for mountain bikes.

Pellegrino was one of eight business owners who wooed potential investors at a recent forum in Westlake Village co-sponsored by California Lutheran University and Southern California Edison.

The companies, which came from as far away as San Juan Capistrano in Orange County, sought financing ranging from $500,000 to $12.5 million, for a total of $30.5 million. The money would pay for product development, personnel, advertising and the like.

It's one of several such forums sponsored by Edison. Another is scheduled for June 17 in Lancaster.

Are they worth it? Investment banker Jay L. Bartelstone, managing director of Westlake Village-based The Private Financing Group, certainly thinks so.

Bartelstone's company advises firms on finding capital and structuring appropriate financing. One client, Vascular Logics Inc. of Huntington Beach, was one of the companies making a pitch at the CLU forum.

The careful coaching that goes with being picked for a forum gives young companies an advantage in attracting investors, he said.

``It gives young companies exposure to investors - it's like a meeting hall,'' Bartelstone said.

James Stancill, professor of finance in the Marshall School of Business at the University of Southern California, said there are two types of venture capitalists: the professional investment firms and the individual investors, the angels.

The professional venture capitalists have plenty of money which they tend to invest in the more exotic, high-tech firms that have a strong probability of going public in the near future.

The angels, who tend to be publicity shy, gravitate toward the not-so-exotic start-ups. They fund five times as many companies as do the professionals, Stancill said. And there are plenty of them in the Los Angeles area.

And because their investments are not reported the way professional venture capitalists' are, there may be an erroneous impression that more money is invested up north.

``What you get down here are the stealth fighters that are evading the radar,'' Stancill added. ``These people are not on the radar screen, these angels.''

Both, however, are particularly apt to invest in high-risk start-up ventures when the stock market is hot because they finance their investments from their market winnings.

``Right now, it's just all kinds of winnings in the market,'' Stancill said. ``That's why it's the best time in the world to do a start-up.''

Negative factors

Northern California - and the Silicon Valley, specifically - attracts institutional investors because they're interested in high-tech companies, according to Rebecca Jones, a project manager for Southern California Edison.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., added that Los Angeles is not perceived as a high-tech center, and the area's vastness works against it.

``The area is so spread out that a lot of times when venture capitalists come in, they don't know where to start,'' he said.

That's where investor forums come in. Every March for four years, the EDC has run a forum that Kyser said has helped companies raise $5 million in much needed capital.

The EDC's Venture Capital Forum provides coaching and mentoring to help the carefully screened companies - typically 12 to 16 out of about 100 applicants - make the strongest possible pitch to investors.

``People just need to learn how to do this type of thing,'' Kyser said. ``The talent is here. We have to continually be sensitive to what these people need.''

For small businesses

These forums are particularly useful in linking small businesses with the angels, said Alan Carsrud, professor of entrepreneurship at the Anderson School at the University of California, Los Angeles, and chairman of the UCLA Venture Development Program.

``When it comes to angel investors, I am not convinced we are as short of money as we are short of mechanisms to get the money to the people with the ideas,'' he said.

The CLU/SCE Enterprise Development Forum, which this year was held at the ritzy North Ranch Country Club in Westlake Village, has helped about 20 businesses raise $2.8 million in three years, said Charles Maxey, dean of CLU's business school.

About 150 people attended the event to watch the company heads present their well-laid plans for success - and carefully prepared pleas for money.

Using charts, graphics, product presentations and other eye-catching devices, each company made its case in seven well-rehearsed minutes. The $150 forum fee includes assistance in writing plans, creating presentations, and mentoring.

Some companies were looking for angels, who tend to shun the limelight, to invest relatively small amounts of money.

Others sought a professional venture capital firm with big bucks to invest.

Marek Sekowski, president of Tarzana-based Utoptics Inc., said he has raised about $500,000 through private investors for his company, which has developed a laser-based measurement device. He was hoping to find investors at the forum willing to give him $4 million but not much advice.

``Very often they come in and tell you how to run your life,'' he said. ``For some of us it's hard to bear.''

For others, this year's forum provided an opportunity to learn from past mistakes. Ronald Hickling, president of Newbury Park-based TechnoConcepts Inc., said he failed to attract an investor at the forum two years ago because he did not have a satisfactory company strategy.

This time, however, he was ready. A week after the forum he had spoken with three institutional investors interested in ponying up the $12.5 million he sought to develop a new proprietary digital signal processing technology.

``(Angels) are not as willing to take as big a risk as a venture capitalist,'' Hickling said.

The forum was also helpful for Steve Woodworth, president and founder of Channel Islands Equities, a private investment banking firm in Oxnard.

Seeking opportunities

He was looking for so-called emerging growth companies - that is, firms beyond the start-up stage with annual sales ranging from $2 million to $50 million - for investment opportunities.

He thinks he found two likely candidates, which he wouldn't name because he hadn't signed a deal yet.

The forums are good places to contact potentially worthy emerging growth companies and ``compare notes'' with other investment companies and venture capitalists, he said.

``You're able to get a snapshot of what's going on in the market when you talk to these people,'' Woodworth said.

Meanwhile, Pellegrino - who needs $700,000 - met with The Private Financing Group's Bartelstone and five potential investors whom he termed ``real live ones.''

``All of them are willing to give me the full amount,'' he said. ``Now it's a matter of me trying to figure out who I can best work with.''

CAPTION(S):

2 Photos, Chart

Photo: (1--Color) Tony Pellegrino, president of Adventure Components Inc., peers through a sprocket for a mountain bike at his Westlake Village business.

(2) Investment banker Jay L. Bartelstone, left, offers advice to Westlake Village businessman Tony Pellegrino.

Tina Gerson/Daily News

Chart: (Color) SILICON IMPLANTS

Investors continue to inject money into the Silicon Valley at a much higher rate than anywhere else in the state.

SOURCE: California Research Bureau