Equity Research Group

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Published in U.S. 1 Newspaper on February 9, 2000. All rights

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Angel Matching on the Web: Susan Woodward

Stock trading on the Internet is now old hat. The next

new thing is Web-based angel investments, an investment banking model

being pioneered by San Francisco-based Offroad Capital Corp. (E-mail:

info@offroadcapital.com).

Investors who aren’t in the Silicon Valley neighborhood have a hard

time finding and participating in interesting offerings, says Susan

E. Woodward, vice president of research and chief economist of

OffRoad Capital. "We do deals with interesting ideas not in the

Silicon Valley. Offroad really improves the access to private equity

market for both investors and issues." She will tell about Offroad

Capital’s new model for private equity financing at the Venture

Association

of New Jersey on Tuesday, February 15, at 11:30 a.m. at the Westin

Hotel in Morristown. Cost: $45. Call 973-631-5680.

The daughter of a GM dealer in southern California, Woodward has a

bachelors (Class of 1970) and a Ph.D. from UCLA and taught on the

college level before moving east to take jobs with the federal

government:

for the Council of Economic Advisors, as the chief economist at

Housing

and Urban Development, and as chief economist at the Securities and

Exchange Commission. She left Washington in 1995 to get married and

move back home to California.

What makes her company different from other investment banks is that

virtually all its business is conducted on the Internet. "We

select

the best ideas, put all the relevant disclosures on the Internet,

and make it available to a group of high net worth investors, mostly

individuals. We use the Internet to deliver all the materials,

including

the `road show,’ which we call the `off road show,’" she says,

referring to the tour made by a start-up’s executive team to meet

with investors in cities across the country.

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Equity Research Group

In presenting a virtual road show Offroad Capital resembles the

Princeton-based

Equity Research Group, affiliated with U.S. Trust Co. at 5 Vaughn

Drive (U.S. 1, June 30, 1999.) But Offroad Capital uses the Internet

even more. "Essentially we hold an auction to rank the orders

by price," says Woodward. The lowest bid that will fulfill the

amount needed sets the price for the whole deal. Every person who

bids that price or higher gets to buy stock on the first day. On the

second day, those who underbid the winning price can get another

chance

— at the higher rate.

Woodward claims "thousands of investors" on her network, and

it may be easier than you would think to qualify as one of those angel

voyeurs. The net worth standard for angels that Offroad Capital uses

is the same as the SEC’s standard — $1 million in net worth, and

that can include your house. "We don’t ask investors for proof,

but we do a credit check and a fraud check to be sure they pay their

bills and haven’t served time for SEC violations."

Woodward scoffs at supposed competition, such as the recently

introduced

ACE Network of Angels run by Stash Lisowski at the New Jersey

Institute of Technology Enterprise Center (973-643-5740, E-mail:

stash.r.lisowski@njit.edu).

Under this plan, "angel" investors of sufficient net worth

can qualify to enter the network to view deals put up by

entrepreneurs.

The angels can browse anonymously until they get ready to enter a

deal.

"The ACE network is just a bulletin board," says Woodward.

"It has no intermediary to do any research, and no facility to

price a deal. We put all our materials on Internet and use our auction

engine to determine price. We recommend a price, but it is the

investors

who determine the price of the deal." The software includes an

Oracle database and an engine written in C++ with a Sun Solaris 2.6

operating system.

Her company’s portfolio includes Patchlink.com, in Scottsdale, Arizona

(a remote server manager), PlexusNet Broadcasting (which takes trade

shows onto the net) and Quantum 3-D (which makes fancy simulations).

"Our website went live in March, 1999, our broker-dealer license

was put in place in June, our first deal was put up in August, and

our fifth deal is live now," she says.

For the angels in New Jersey she has this promotional advice:

"Even

if you are not interested in our product directly, you would learn

a lot by watching our deals and seeing how they are valued. Even if

your goal is to invest in companies closer to you, see how our deals

get priced."

For the entrepreneurs, she echoes familiar advice: A well-prepared

business plan is essential. The good signs: a management team that

knows where it is going, and some kind of defendable market niche

that someone else can’t duplicate immediately.

The unspoken advice is that if you want an Offroad deal, show up on

February 15. "Deals are coming to us," says Woodward.

"Some

we run after, but some are coming to us."

— Barbara Fox


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