Spokane entrepreneur and angel-investing fund organizer and adviser Tom Simpson says he has formed a new family of angel funds that shortly will begin making its first investments in emerging companies in the Inland Northwest.

Named Kick-Start II, the fund family has about $550,000 that Simpson says he expects will be invested in fledgling businesses over the next two to three years at an average of about $50,000 per investment.

Kick-Start II succeeds an initial angel fund family of similar size, dubbed Kick-Start I, that Simpson launched in 2009. He says that fund family has invested in 10 companies and will be making its 11th and final investment this month.

Simpson says he envisions launching additional Kick-Start angel fund families successively in coming years—as in Kick-Start III and Kick-Start IV—as each one becomes fully invested, assuming that they perform well for participating investors.

Among the businesses here that have received investments through Kick-Start I are online eco-friendly products retailer Green Cupboards Inc., software design company Gravity Jack Inc., cloud computing provider 2nd Watch Inc., and hospital telepharmacy services provider Medical Review Inc.

Simpson says he formally kicked off Kick-Start II two weeks ago after receiving all of the more than half a million dollars in committed investment funds, and that investors in Kick-Start II include individuals and corporations here. He says he is one of the investors and will serve as the fund family's managing member.

He says the new fund family enables him to lead and structure, or participate in, investment opportunities that are presented to the Spokane Angel Alliance, a separate group that also invests in promising emerging ventures. Simpson also serves as president of that group.

Other Angel Alliance members also invested in most of the companies that Kick-Start I invested in, and those companies typically also raised money from separate investors as well, Simpson says.

Two of the companies in the Kick-Start I portfolio have gone on to raise additional capital from venture-capital funds, and Simpson says he expects two or three more to secure venture financing over the next 12 months.

Angel investors are accredited individuals or corporations that provide capital for startups and early-stage companies, usually in exchange for an equity stake. Because they have a higher risk exposure, they look for a higher return that they would garner from more conventional investments.

They often provide the first outside financing that early-stage companies receive beyond what they can raise from family members or friends while they're still too immature to seek financing from venture firms or financial institutions.

In addition to providing needed seed funding, an angel might play an active role in guiding the entrepreneur, including taking a seat on the company's board or even joining the company as an executive.

The Spokane Angel Alliance, which currently has about 90 members, holds luncheon meetings six times a year at the Davenport Hotel downtown and, at each meeting, hears presentations from two or three companies seeking angel funding.

The Angel Alliance is a program of Connect Northwest, a nonprofit organization here overseen by managing director Catherine Greer that supports entrepreneurs and early-stage companies. It provides coaching and mentoring services and holds regular education seminars and networking events.

A separate Spokane-based venture-capital fund, Inland TechStart Fund LLC, launched in September of 2011. At that time, the company said it planned to invest about $600,000 in young companies during a two- to three-year period.

For the Kick-Start angel fund families, Simpson says he seeks investment opportunities mostly within a 100-mile radius of Spokane, but he adds that he occasionally evaluates businesses in Seattle, Boise, and Montana that are referred by angel funds in those regions.

"We endeavor to maintain close relationships with other regional angel funds as a source of co-investment. I maintain a membership in the Seattle Alliance of Angels, after which the Spokane Angel Alliance was modeled," he says.

Kick-Start II will invest in preferred stock, common stock, or notes that can be converted into preferred or common stock, Simpson says. He sometimes takes a board seat, or retains board observation rights, but says he also is OK with not being represented on the board, and serving merely as an adviser.

He says he expects Kick-Start II to make about the same number of investments as Kick-Start I, and adds that the first two investments are expected to close, or be finalized, this month. He declines to identify the companies that will receive that capital.

Of Kick-Start I, Simpson says, "Overall, I have been pleased with the performance of the companies in the portfolio and the quality of the investment opportunities. The greater Spokane region continues to expand and broaden its entrepreneurial sector."

He attributes that partly to a string of successful investor exits here, citing as examples the sales of Pacinian Corp. to California-based Synaptics Inc., Post Falls' TriGeo Network Security Inc. to Texas-based SolarWinds Inc., and Signature Genomics Laboratories LLC to Massachusetts-based PerkinElmer Inc.

During the last three years, Simpson says, members of the Spokane Angel Alliance have funded 13 companies, investing about $3.2 million. Those companies have raised nearly $20 million from other investors and collectively now employ more than 300 people, he says.

Companies and firms here that provide program funding to the Angel Alliance and Connect Northwest include Berg Cos., Cowles Co., Hart Capital Management Inc., Lee & Hayes PLLC, Moss Adams LLP, Sterling Bank, Washington Trust Bank, Wells Fargo, and Witherspoon Kelley.

Connect Northwest is led by Greer and a board of directors that includes Kevin Cox, Joe Herzog, North Leatha, John Pariseau, Rick Repp, Steve Salvatori, and Andrew Schultheis.