What You Need to Know About Angel Groups

You have a group of people that get together with nominal leadership that’s often elected from the membership itself. There are bylaws, rules and customs that help organize how the angel group operates, as a whole, and how investments are made.

Transcript

An angel group is probably best thought of as a country club without a golf course, where the activity instead of golfing is investing in startup companies. You have groups of people get together, you have a nominal leadership that’s often elected from the membership itself. There are bylaws and rules and customs that help organize the way the angel groups operate.

The typical cycle of an angel group though is to meet at some regular interval—often, it’s a month, sometimes it’s every other month, occasionally even just once a quarter—and invite companies that are selecting investment to come present to the group over a meeting, perhaps an afternoon meeting, often over a meal instead, say lunch, or in our case over a dinner. The entrepreneur makes his or her presentation, and after that dinner, there is some follow-up. The Band of Angels gets its deals from two sources. One is referrals through our network, and the other is through our website. And that’s typical of any angel group. We have a system for meeting periodically, once every month, to select three deals out of the constellation of deals that applied for an invitation to come to our monthly dinner. At that dinner, they have a few minutes to pitch and answer some questions, and it’s really sort of an opportunity for them to broadcast what they do and who they are to a large group. We typically have a hundred people at our dinners. After that, members of the Band of Angels vote with their feet by approaching the companies that pitch that they’re interested in for further discussions. And sometimes when they’re very excited, they’ll write a check right away. But more often, they lay out a plan for further engagement with the entrepreneur, and the entrepreneur’s job is to keep that engagement going. It’s very typical that an angel will be very executed when they hear about an opportunity, but we live in a very fast-paced world where other opportunities come around the corner the next day and the next week. And so the entrepreneur’s job is to treat this as any sales opportunity by engaging with their angel like they would a perspective customer, forming a relationship with them, answering questions, being responsive, and eventually closing the deal if it’s appropriate to do so by acquiring an investment from them.

Suggested Readings

Founders School || Financing Your Venture: Angel Investment || What You Need to Know About Angel Groups || Impact Guide (PDF).

Hudson, Marianne. “Important Things to Know About Angel Investors.” Angel Capital Association. Presentation. 2014.

FAQs for Entrepreneurs. Angel Resource Institute. Resource page. 2015.

Angel Capital Association – ACA is a collective of accredited angel investors, North America’s most prolific early-stage investment class. The association is the largest angel professional development organization in the world.

ACA Featured Research on angels, the angel investing process and the market that impacts how angels invest.

Questions for You

What are the local angel groups near me?

What is their custom for soliciting investments?

What is my plan for fostering and continuing engagement with a potential angel investor?

Questions for Your Team

What are the local angel groups in our area?

What are their customs for soliciting investment?

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