Angel Capital Group - League of Extraordinary Investors.
Angel Capital Group is an Alliance of angel groups and funds that stretches from Denver to Charleston and Minneapolis to South Florida. The Alliance collaborates to find and fund the very best ventures in the Heartland. We believe great ideas are just one angel investor away from changing the world.
Veteran Ventures Capital (VVC) Veteran Fund I Launches and Makes First Investment
Knoxville, TN; April 5, 2019 – VVC Veteran Fund I (https://www.veteranventures.us/) officially broke escrow and has made its first investment in HAVENLock, Inc. of Nashville, TN (www.havenlock.com). “This is a great day for both VVC Veteran Fund I and veterans across the country,” said Derren Burrell, the Founder. “We are proud to be a strategic partner of Veteran Fund I as they officially launch” added Eric Dobson, CEO of Angel Capital Group, LLC.
“HAVENLock is an excellent example of the Fund’s goal to invest in hardworking, motivated, innovative veterans starting and running high growth-businesses,” said Derren Burrell. The company produces a suite of smart locks for residential and commercial applications. “We feel this company is on the leading edge of its market segment. And, we are thrilled to be part of this company’s future growth plan,” Burrell expanded.
Alex Bertelli, CEO of HAVENLock said, “VVC Veteran Fund I fills a real need in the marketplace to support veterans and their businesses with venture-style capital.” He continued, “HAVENLock is proud to be the first investment of the Fund, and we’re thoroughly excited to have such a strong strategic partner that understands our mission and supports our vision.”
ABOUT VVC VETERAN FUND I:
Veteran Ventures Fund I is an investment fund managed by Veteran Ventures Capital. Veteran Ventures Capital is an early-stage fund & consulting firm focused on military entrepreneurs. We interact with businesses that have military veteran leadership exclusively because we recognize the value of their experience, training and character.
The Angel Capital Group is a fully syndicated private equity network with operations in nine states. The network brings Angel investors and entrepreneurs together in an environment that celebrates innovation, rewards strategic risk-taking, and promotes performance. ACG enjoys a 12-year history and has invested approximately $49M in 157 companies across a variety of market sectors. The portfolio has created over 4500 jobs and $900M in follow-on capital investments by other funds. To learn more about ACG visit https://theangelcapitalgroup.com/. Like, visit or follow us twitter.com/angelcapitalgr, linkedin.com/company/angel-capital-group/about/, or facebook.com/angelcapitalgroup
Over the now almost 12 year storied history of Angel Capital Group, we have found key information is indicative of a team ready to use our capital to buy revenue, make use of our network and expertise, and to become business partners. These are key characteristics we look for because we have learned these lessons the hard way.
Our Phase II application is designed to get to key questions and to *test* the entrepreneur. Entrepreneurs who embrace the system generally do well. They are prepared with the right information (e.g. they have done their homework and understand how this works). They are more than likely coachable. And, they are savvy at raising capital….and sales! Those that do not embrace the system tend to bounce back and do not receive funding. [That should not be a revelation to anyone](https://appalachianinvestors.com/2018/10/18/the-great-communications-divide/)! If you are applying through our application, you would be wise to read this fully, prepare your answers, and respond honestly. Hyperbole and “gaming the system” are easily detected in this process. That usually means the application goes in the digital, circular file.
The process we go through starts with your application for funding. The information is posted on our internal website *for our members only*. Initially, the information is reviewed by the screening committee of one of our funds or groups (seven now, soon to be 10). The screening committee reviews the information and decides if the information is forwarded to their members. Once the members have reviewed the information, they will ask you to pitch, decide to invest, or pass on the deal. If they decide to invest, they can request the application be forwarded to all network members for review and funding by the Alliance. There are several distinct levels of review and diligence is performed at each level. The good news is by the time a company is invested, it has been thoroughly vetted and ready to use our investor’s capital wisely. If you use this process correctly, even if you do not receive funding, your company will be better for having gone through a professional diligence program. We sincerely want you to succeed, even if it does not involve our network.
The application is broken up into four parts (so that you don’t run the risk of losing all your work if you have a browser issue): General Overview, Multiple Choice Questions (that are scored), Long Form Questions, and file uploads (Executive Summary, Pitch Deck, Proforma, Balance Sheet, Income Statement, Term Sheet, and Capitalization Table – more on this below), all based on the [heuristics](https://appalachianinvestors.com/2018/08/10/where-to-start-with-diligence-heuristics/) we use to rapidly screen companies so we can provide fast “yes’s” and “no’s” without wasting your time.
We need your contact information, website, and social media handles (Facebook, Twitter, LI, etc.). We are going to visit your website, social media, and take a look at you to decide if you are someone we want to be associated with for the next 3 – 7 years.
We need your corporate address including corporate type (Inc. or LLC). We don’t invest in sole proprietorships or in S-corps. So, this is an easy litmus test to understand if you know what you are doing.
We need a paragraph (no more than 4 sentences) that describes your company.
We have [multiple groups within the Alliance](https://theangelcapitalgroup.com/locations/), each with its own affinity (Nashville is healthcare, Knoxville is advanced materials, Boone is SaaS, Red Wing is female focused, etc.). So, we need to know to whom to direct your information.
We want to know why you get up in the morning (i.e. your “why” in the [parlance of Simon Sinek](https://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action)). If you are not driven to get up and self-start every day, you are not cut out to be an entrepreneur.
We want to know what the most compelling reason we should review the venture is in your mind. [This answer can be very telling!](https://theangelcapitalgroup.com/2016/05/24/will-you-fund-my-venture/). Selling shares is no different than selling products and services. If you can’t give us a compelling reason to take you seriously, we don’t. And, this is a great way to insert personality into the application process so we begin to know who you are and if you are creative, innovative, and focused on sales. If you can make an investor say “Wow, that IS pretty cool,” then you are 80% of the way to getting an investment…assuming your materials, business model, and projections are legitimate.
We need to understand what you see as your top three strengths/advantages. We will read all your materials with these strengths in mind.
We need to understand your top three non-capital related business risks. We will be looking in your materials to understand how you plan to mitigate these risks.
Multiple Choice Questions: (scored 15 questions, 9 points max for each question = 135 possible points)
“Is your product novel and disruptive?” We generally don’t invest in “better mousetraps.” So, we are seeking to understand if you are competing on value or price. We invest in the former.
“What is the size of your investment round?” We generally invest in rounds of $250k to $2.5M. So, we are seeking to validate you are in our sweet spot.
“What is your premoney valuation?” We generally invest in companies, for a first round, of $1500k – $250k. We generally plan to do 2 or 3 rounds of capital with a company that is growing and executing its business plan. Second and third rounds tend to be $150k – $450k. That is why our syndicate model is so important. We can help you scale quickly.
“What is the status of your product/service?” We are generally investing in companies that are within six months of meaningful revenue on both ends. Meaning we are generally seeking seed or early Series A deals. We understand product and software development cycles. So, we can estimate your time to revenue based on your product development status.
“How much revenue have you generated in the last 12 months?” We will invest pre-revenue, but prefer a company to have clients and revenue. Valuations directly reflect the latter.
“What is your revenue model?” We prefer recurring revenue models over laborious single product sales and fulfillment models. That is not to say we won’t invest if the margins are sufficiently large.
“What are your gross margins?” Gross margin is a proxy for “room for error.” If you have large gross margins, you have room to make mistakes and recover. The opposite is true. So, this is really a measure of risk, more than money.
“What is the total addressable market (TAM) for your business?” We generally invest in markets of $1B+. The reason is a market of this size will allow for several companies to start, grow, compete, and be successful. So, this is more a measure of “room to operate.”
“What is the Compounded Annual Growth Rate (CAGR) of your market?” We generally like to see above 5% CAGR or better. As we get beyond 20% CAGR, the market is hot! So, this is a measure of interest by others in your market.
“What is the state of the market?” We like to see unconsolidated markets where several companies can compete that will soon go through some sort of consolidation. In the consolidation processes, acquisitions occur, which is generally how we get our money back.
“How is the market timing for your product?” Timing is a HUGE issue for an entrepreneur. Too early to market means you will spend your time…and our money….educating the market. Too late to the market means you will be competing on price if you can elbow your way in at all. Timing is the one thing an entrepreneur can’t control.
“What is the status of your intellectual property (IP) or barriers-to-entry for fast followers (BtoE)?” We generally invest in companies with significant patent rights because, historically that has created barriers-to-entry for fast followers and driven acquisitions. That is not a fail-safe model, but IP adds to the value of a company at exit, and often is the reason for acquisition. We want to know if you have any intrinsic barriers-to-entry built into your company.
“Does your team have a demonstrated track record of execution?” The experience of the team is the largest predictor of success we have found. So, we want to know if this is a been-there-done-that-learned-the-hard-lessons team or a one-man band newbie.
“How much capital have you raised in the last 12 months?” Having raised meaningful capital in the last 12 months is the second largest predictor of success we have found. If your deal appeals to a broad group of investors, you have a higher likelihood of raising capital easily and with good terms.
“Describe the mergers and acquisition (M&A) activity in your market over the last three – five years with a look to the future. Initial Public Offering?” If your market is hot, there is a higher chance you will be acquired. It is that simple. Name names here. It shows you understand your own market place.
Long Form Questions:
“Provide an overview of the management team. Why is this the right team to win in the market place? What unique skills and experience does the team have? Why should the investor trust the team with their hard earned cash?” We are seeking information on your team, which is the largest determinant variable of success. Winners keep winning.
“What is the point of pain that your company addresses? How is your product/service addressing it? Why is it critical to your clients?” We invest in companies that are addressing real-world problems for which we can clearly see a market for the solution.
“What is your value proposition? Who are your clients? Why would they buy from you? What is their motivation? What is their ROI?” Clients buy products and services because it saves money, makes money, or both. We need to understand your monetary value to your customer.
“Describe your business model. How do you make money? What are your revenue streams? How much revenue does a customer represent?” We need to understand how you make money.
“Please provide an overview of the market for your product/service including market segmentation.” We need to understand the market from your perspective.
“Provide an overview of your marketing plan. Who are you selling to and how will you reach them? What is their alternative? What is your “beachhead” strategy?” Please tell us how you plan to message your clients. We want to understand if you know the difference between marketing and sales.
“Provide an overview of your sales plan. How will you sell to your customers? What channels will you use?” We need to understand how you intent to capture clients. We want to understand if you know the difference between marketing and sales.
“Describe your commercial traction. Do you have paying customers? Describe your ideal customer profile.” Traction is the most important reason to invest in a company.
“Please summarize your use of funds and financial projections including cash flow positive and break-even milestones. Describe your cost structure and capital needs.” How are you going to spend our money? If you are spending it on marketing to generate sales, we are happy. If you are spending it on human resources to keep the lights on and the doors open, we are not interested.
“Please describe the sources of competition in the marketplace and your sustainable competitive advantage(s) that will help you win in that same marketplace.” We need to understand the competitive landscape from your perspective. We need to believe you have a sustainable competitive advantage that is worth our money and your time.
“Describe your intellectual property position. Do you have patents? Trademarks? Copyrights? What barriers-to-entry do they create for your competition?” We need to understand what, if any, barriers-to-entry by fast followers you have created. We understand the value of IP and its challenges. IP still commands a premium in the Heartland.
“Please enter the Myers Briggs personality profile results (ENTJ, INTP, etc.) for each of your management team (CEO, CTO, CFO, CMO, etc.):” The team, and more importantly the chemistry of the team, is critical to the success of the company. We use this information to begin to understand how your team will react to adversity and success. We don’t disqualify anyone based solely on this measure, but it does help us guide our diligence when we begin to analyze the team’s ability to execute and succeed. For instance, if you do not have a diversity of personalities on the team, we can expect dissension within the team at some point or you will succumb to “we think.”
“Who are the most likely acquirers in your market that you will target for exit? Are you seeking IPO? Provide examples of prior exits and IPO values.” Understanding who you want to acquire you helps create a roadmap to acquisition and maximizing your valuation at exit. If you don’t have a map, it is easy to lose your way.
“Are there any intangible advantages or reasons that we should consider this venture for funding?” We always consider intangible value of the company for investment. If we can do the right thing AND make money, the answer is obvious.
“Describe your deal terms (e.g convertible note, SAFE Note, Series Seed, revenue sharing/royalty, preferred equity). Are you using industry standard terms (e.g. NVCA standard templates and terms)? Please list the terms.” Let us know what terms you are offering or, preferably, from a lead investor.
“What are the top three key performance indicators (KPI) or metrics to measure success of your venture?” We will measure your performance against these indicators.
This may sound like a lot of information, but all of this should be in your business plan. You should be copying/pasting this info. If you are spending hours creating new content, you are not ready for professional investors to perform diligence on your company. That is what it takes to get investment in this day and age. We deeply dive into your business and want to understand your leadership capabilities so we can feel comfortable that you can run a business, will take advice when given, make hard calls when necessary, and be responsive to your new business partner……us.
Nearly 40 entrepreneurs, owners of startup companies, and several service providers who support them gathered at the West Virginia Regional Technology Park on September 19 to learn how angel investors select – and de-select – their investments.
The workshop, entitled, Pitching Angel Investors: What to Expect and How to Prepare, was led by Eric Dobson, CEO of Angel Capital Group (ACG), and Scott Ewing, COO of ACG.
Eric Dobson, CEO of Angel Capital Group, shares insights at TechConnectWV’s recent “Pitching Angel Investors: What to Expect and How to Prepare” workshop.
ACG is a Nashville, Tennessee-based syndicate of angel funds across the Appalachian region and is identifying opportunities for investment in West Virginia early-stage and existing companies. That exploration includes assessing those companies’ market potential, evaluating their readiness to seek investment, and working to match individual companies with funds and investors that are the best fit for their products and stages of development.
While reality tv shows might give viewers a sense of how angel investor pitches work, TechConnectWV’s workshop gave attendees an in-depth, real-world look at the due diligence process that investors go through when evaluating investment opportunities.
Participants also learned what should and should not go into a presentation to angel investors.
In ACG, the workshop also gave entrepreneurs and early-stage companies a unique opportunity to meet representatives of a regional angel investor network.
The September event was TechConnectWV’s second Pitching Angel Investors: What to Expect and How to Prepare workshop. The first was held in Fairmont in early June. Entrepreneurs and early-stage companies at both workshops represented a wide range of technology, agriculture, transportation, public safety and educational products and services.
Anne Barth, TechConnectWV’s executive director, said the workshops met the goal of helping to bridge the gap between West Virginia entrepreneurs and the angel capital market.
“We are extremely pleased with these workshops, and the feedback has been very positive,” Barth said. “The broad range of products, services and ideas that the entrepreneurs brought to the discussion was fantastic. They represented the very real potential we have in West Virginia to grow a more entrepreneur-based economy.”
Barth also credited ACG’s work in developing a curriculum that delivered a clear understanding of how angel investing works.
“ACG is a great partner for us as we work to increase access to angel capital for West Virginia’s entrepreneurs and startups.”
Both workshops were a part of TechConnectWV’s NextUp West Virginia project. Made possible by the generous support of U.S. Economic Development Administration and The Benedum Foundation, one of NextUp West Virginia’s goals is to help more entrepreneurs and small businesses in West Virginia become better prepared to access angel investor resources.
With the goal of informing business startups in West Virginia on how to obtain early-in funding for their ventures while also working to attract new capital for state businesses, TechConnect West Virginia will host “Pitching Angel Investors” – a seminar from 9am-1pm on Wednesday, September 19th at the Advanced Technology Center in South Charleston. The event is part of TechConnect’s NextUp program, made possible by funding from the U.S. EDA and The Claude Worthington Benedum Foundation.
Featuring presentations by Eric Dobson, CEO, and Scott Ewing, COO, of the Tennessee-based Angel Capital Group, the seminar will inform entrepreneurs on what to expect when pitching angel investors and how to prepare. Dobson and Ewing will present their workshop entitled “The Mind of the Investor.” The seminar is oriented to informing investors, entrepreneurs, economic development entities, and the media about how angel investors make investment decisions in companies with little history, but with a tremendous amount of potential.
The event is presented in partnership with Advantage Valley, Charleston Area Alliance, Putnam County Development Authority and the Huntington Area Development Council. For more information, or to register, contact Anne Barth at email@example.com. Registrations due by September 7th.
Veteran Ventures Capital has officially begun fundraising efforts to help veteran-affiliated companies
within the region become even more of a success story.
Veteran Ventures Fund I (Fund) is a microventure fund formed in Knoxville, TN, and a partner in the
Angel Capital Group and Appalachian Angel Investor Alliances, with assistance from the Appalachian
Regional Commission (ARC) , devoted to identifying high-growth ventures in Southern Appalachian
Region. The Fund is founded by Derren Burrell and a team of investors in the area that all want to
capture businesses created and led by veterans.
Research has shown the training received while in military service along with the innovative,
‘mission-accomplishment’ attitude of a veteran is perfect for entrepreneurship. 25% of all veterans
desire to start their own business when transitioning from the military . “When I transitioned 1 out of
the Air Force after 21 years as a financial manager, I experienced firsthand the challenge of raising
capital, and Veteran Ventures Capital seeks to bridge that gap,” says Derren.
The Fund is designed to deliver angel capital industry-sized financial returns to its investors, while, at
the same time create quality, high-paying jobs and establish access to emerging sector opportunities
throughout the Region. The Fund is initially capitalized at $1M, but will continue to raise funds until
$5M is reached or the Fund is fully invested. The Fund plans to typically invest $50k-$250k at the
early stage, where investors are actively involved with the founders to help them build successful
companies, and may provide larger follow-on investments.
The members of the Fund are a dynamic group of individuals with backgrounds from Software as a
Service (SaaS) to banking, real estate, economic development, national defense, university
If you wish to attend one of VVC’s monthly meetings or join the Chapter, please contact Derren
Knoxville, TN; September 8, 2016 – the Angel Capital Group Alliance of angel investors in 10 cities across nine states, has invested in Arkis Biosciences, Inc. (www.arkisbiosciences.com/) as part of a $3.4M round of financing led by premier biosciences venture capital firm Innova Memphis. This marks an expansion of the ACG portfolio of medical device investments over the last 8 years.
“Our investment in Arkis confirms our belief that there are outstanding companies and investment opportunities across the heartland that can prosper with the support of angel funding and assistance,” said Eric Dobson, Chief Executive Officer of ACG(www.theangelcapitalgroup.com). The company produces a suite of neurological tools and advanced implantable devices to address hypertension and conditions such as hydrocephalus. “We feel this company is on the leading edge of its area of science and medicine. And, we are thrilled to be part of this company’s future growth plan,” Dobson expanded.
Chad Seaver, CEO of Arkis BioSciences said, “The success of this financing round underscores the confidence in Arkis’ solutions to address the longstanding underserved needs of the market and the value of our strategy.” He continued, “Arkis’ next generation Endexo® lumens and streamlined surgical instrumentation are just the beginning of a pipeline of R&D innovations backed by strong investor support, positioning Arkis to become the clear innovator in patient care and provider efficiency for our market.”
ABOUT ARKIS BIOSCIENCES:
Arkis BioSciences is a medical device company, offering next generation surgical tools and implantables for advancing the neurosurgical treatments of intracranial hypertension arising from traumatic brain injury, hemorrhagic stroke, hydrocephalus, and similar disorders. The company’s Tunneling GuidewireTM allows for 1/3 less invasive ventriculoperitoneal shunt procedures while its Endexo® anti-thrombogenic catheters are slated for addressing prevailing catheter obstructions for more durable cerebrospinal fluid management. Further innovations within the company’s R&D pipeline are poised to overall transform the market for intracranial hypertension treatments.
ABOUT ANGEL CAPITAL GROUP:
The Angel Capital Group is a fully syndicated private equity network with operations in nine states. The network brings Angel investors and entrepreneurs together in an environment that celebrates innovation, rewards strategic risk-taking, and promotes performance. Through membership in Angel Capital Group, once-solitary Angel investors, or even a single Angel Group, have access to the best deals (regardless of location or industry) without facing the pressure to fund an entire deal on their own. A national brand presence allows ACG to source hundreds of quality investment opportunities, supported by a suite of investor services, to incentivize for true portfolio diversification. ACG enjoys a 10-year history and has invested approximately $44M in 137 companies across a variety of market sectors. The portfolio has created over 4500 jobs and $750M in follow-on capital investments by other funds.
It is a romantic idea to want to be an Angel…to be a patron of the startup, or as one of our members phrases it, “worshiping at the altar of capitalism.” Every day I hear about how much fun most people believe my job is because of the ability to work with passionate entrepreneurs to turn dreams into reality. And, you know what? It is fun! Most successful people I know say they want to become angel investors. But, not every qualified investor can or should be an Angel. And, I am tired of UNMAKING Angels!
It is no secret that Angel Investors, as an industry, enjoy better than market returns. According to the Kauffman Foundation, the industry average is 2.6x on your money in 3.4 years (individual results will vary widely…and we are about to talk about why!). Out of the 5 – 8 million qualified investors (according to the SEC regulations of $1M in networth excluding your primary residence or $200,000 in annual income), only approximately 320,000 individuals choose to do so (Angel Capital Association, 2016). That is a NOT a happy number! It amounts to between 4 and 6 % of those qualified, which is well below the “tipping point.” If the returns are so great, why aren’t the rest of the qualified individuals investing in the angel capital industry?
The answer is two-fold. First, angel investing is not easy. It takes work. It takes time. And, it takes dedication, participation, and collaboration. Second, it takes intestinal fortitude to weather the inevitable losses that come, typically, before the wins. Industry numbers on the process are intimidating. As an industry, Angels return capital from 6 out of 10 investments with one to two exiting companies paying for all the loses plus a healthy profit. In this model, 4 – 5 will be a total loss, 3 – 4 will be a modest return or loss, and the last 1 – 2 will be the ones that pay for the entire portfolio. Venture capital numbers are, not surprisingly, very similar. It is daunting to watch a great idea in the hands of a passionate entrepreneur crash and burn….and not just one, three to four of them! And, almost inevitably, the ones that return capital are the last to exit. As they say in the industry, the lemons ripen in two years, but the plums ripen in 4 – 7. So, it is not just one leap of faith. It is a series of leaps of faith in the face of statistically backed failure!
For this reason, the industry recommendation is to make 20 investments over 3 – 5 years to give the best odds of returning 2 – 3 times your capital (Rose, 2014). That sounds simple, but it is deceptively hard. We all want to believe we are smart enough to pick the winners, but that is hubris talking, not financial savvy. So, the first few loses are hard to swallow no matter how sophisticated an investor you are. And, there will always be one that will surprise you that you thought was as sure a bet as can be made. Luckily, that works both ways and one will almost certainly surprise you that you thought was a “walking-dead.”
Despite these recommendations, many new Angels want to stick a toe in the water to test it. I do not recommend this. Because, I believe this is the root of UNMAKING Angels. And, we are really good at it as an industry. The fastest way to lose at angel investing is to make two – three investments and then sit on the sidelines “to see how they perform.” Yet, this is exactly what many first-time angel do. They come in with the best of intentions, make two to three investments, and then decide to see how these first few work before proceeding. They have almost certainly nailed one foot to the track at the beginning of the marathon, and they don’t even know it. The likelihood of one of these three being the big home run is one in 10 if you believe the industry numbers, which are also subject to regional variation. And, they will have to wait up to seven years to find out if they hit the lottery or bought a losing ticket. Because they are not investing, they stop participating, lose interest, and slowly drift away. Finally, without meaningful exits quickly, they throw their hands up in the air and proclaim that angel investing is a bust. Thus, another Angel is UNMADE. It is a very, very common process. No matter how many times you tell someone not to fall into this trap, they do. I can’t describe how tired I am of UNMAKING Angels.
There are two types of investors, cowboys and players. Cowboys believe they know one or more industries well enough they can pick the winners, want to be seen socially as leaders, and are willing to make big bets on a few companies. In my experience, they tend to make more emotional decisions with less diligence and shirk off loses rather than admit they need to be part of a “village.” Conversely, players, recognize there is safety (wisdom and support!) in numbers. They recognize that leveraging the collective intelligence of a diverse group of professionals enhances your chances of making a great investment. They also realize that spreading the work of diligence across a network makes the work easier and very valuable due to different perspectives, knowledge, and experience. They sweat the loses, but have enough diversity in their portfolio that they should eventually come out on top. These are the true agents of change in a community – those willing to make a large number of small bets, participate in the company’s success, and celebrate their victories. They know they must be active investors and be involved in the company (Angel Capital Association, 2007). They share the load of being active investors. They understand the value of sharing knowledge and expertise to find and grow great opportunities.
Angel clubs (groups of independent angels that hand-select deals in which they will invest, i.e. the “pass the hat” model) tend to attract cowboys not players. But, there is a better way! I can tell you with our transition from the angel club model to the angel fund model in 2015, our deaflow has increased, our average investment has gone up, the quality of the companies coming through the funnel has increased, we invest in more and larger second/third round financings. Our members are involved in the companies’ daily lives and our network moves along at a healthy cadence. The fund model forces a certain amount of diversity on its members in a healthy way. And, it forces them to do the smart thing with regards to angel investing: set aside an amount of money and invest it in a minimum number of companies over a period of time. In general, that is $50,000 in 10 – 15 companies over 2 to three years. Some people will balk at the cost of forming a fund, but we have found over time, the cost is no different than joining an angel club. This is the recipe for angel investing success. Players are attracted to funds. They enjoy a unity of mission, purpose, and action. And, they remain engaged throughout the entire process.
So, here are the recommendations for MAKING good Angels:
Plan to invest $50,000 – $500,000 over a 3 – 5 year period and invest in a minimum of 20 well researched, top-shelf deals.
Find a like-minded group of people that you want to work with to identify and vet great opportunities.
Perform a minimum of 20 meaningful hours of research on the team and company with a target of 50 spread across your group (the industry stats show these are critical breaking points for success). (Hudson, 2015)
Invest in a diversity of markets based on the experts you can reach to assist you.
Some of your investing should be hyperlocal to impact your community.
Some of your investing should be regional as a rising tide lifts all ships.
Hedge your bets by casting a wider net through angel fund “syndicates” or online platforms to ensure industry, market segment, and geographic diversity.
If you think you have what it takes to become a great Angel, please contact us. We will be happy to hear from you!
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