Cherrystone, founded by BDCRI President Garrett P. Hunter in 2004, is a member-led group with no paid administrative staff, but Dorsey acts as its unofficial managing director, organizing monthly meetings and shepherding deals through the investment process. The group has so far done nine deals, investing mostly in startup companies in Rhode Island including Advanced Image Enhancement, Ion Signature Technologies, Narragansett Beer and Creative Advertising Solutions.

PBN: What differentiates angel groups like Cherrystone from a venture capital firm?
DORSEY: The primary difference is that … angels tend to be willing to come in earlier stage in terms of product development and going to market… and VCs tend to come in later and do substantially larger rounds. In terms of size, angels will invest as little as $100,000. As a group they’ll do a quarter- or half-a-million, or they’ll even syndicate – Cherrystone has syndicated with other angel groups and done rounds as big as $1.4 million, $1.5 million.

Currently, Cherrystone has 55 members, many (but not all) of whom live in Rhode Island; one of the furthest lives in Connecticut and has a child at Brown University. Also, about half their nine deals so far are in Rhode Island, the other half mainly in Massachusetts in syndicates.

BN: What kind of company does the group look to invest in?
DORSEY: The key challenge for any angel group is that you have an expertise to understand the deal. … If a champion emerges [in the group] and really takes a company under his wing and helps shepherd it through the screening and due diligence process, then the deal gets done.

PBN: What return on investment have Cherrystone’s members experienced so far?
DORSEY: ...we’re sort of in purgatory...None of the deals have had liquidity events. At the same time, none of them have cratered either – they’re all out there doing their thing. We’ve done follow-on rounds in I think three of the deals. You know, it’s really only been two and a half years.