Some regional Angel Networks that support both the entrepreneur and the investor are:
Tech Coast Angels techcoastangels.com
Pasadena Angels pasadenaangels.com
Angel investors are individuals who are investing in early stage private companies. They make their own independent investment decisions and historically have done this alone. The decision-making process regarding what represents a good vs. bad investment opportunity varies per individual and as a result, most angels typically invest in what they know or who they know.
The term “angel” originated in the late 1970s when a professor at the University of New Hampshire (William Wetzel) completed a study on how entrepreneurs raised seed capital. Focusing on Broadway, it was used to describe wealthy individuals who provided money for theatrical productions. In a recent year, the average capital raised in this country was $450,000.
Angel investors, mostly individuals, don’t have to do it alone. There are angel investment networks of like-minded, high-net-worth individuals who band together to take advantage of the great collaborative synergies of shared experience. In the best-case scenario, professional investor groups run programs that support entrepreneurial development and get new and returning serial-entrepreneurs dialed in with the tools they need to speak the same language as the investors with the perspective of a single investor.
Inside of most angel investment networks, the members are frequently successful entrepreneurs themselves with a wealth of knowledge of the life cycle of early-stage companies, histories in the entrepreneurial ecosystem, and significant resource networks. Those network connections are absolutely critical to supporting innovation development from the very-early-stage start-up all the way to the return on investment.
These “resources beyond capital” are sometimes even more important than cash. The ability to find and leverage resources is a common trait of successful entrepreneurs. Investors look for that capability as they size up the realistic potential for the management of an early-stage company to generate a meaningful return on investment in a reasonable amount of time.
Interestingly, our experience shows that investors bet as much or more on the entrepreneurial individuals than on the product or service, since it has been shown time and again that the individual who can lead while adapting to the constant barrage of new information has the best chance to win with an interesting ROI.
Angel investors and entrepreneurs alike sit as outliers to the bell curve of society. By definition, these higher risk takers are not average or statistically normal. The impact on society, however, is extremely dramatic as innovation, jobs creation, and economic development go hand in hand with entrepreneurship. As the national and global conversation turns to the impact of entrepreneurs on the health of national economies, the support of entrepreneurs and for the investors who support them is becoming big news.
Why go at it alone?
A few benefits to Angel Networks:
LOTS of “Not Normal”, however, equals ….“almost normal” Within a network of angels or multiple angel groups, the number of investors that review a deal with an investor’s perspective and intentions, but with highly varied experiences, can be significant. Statistically, the larger the number of investors in a network, the more likely it is that those investors can begin to mimic the perspective of the market in combination with their perspective as investors. This is an incredibly powerful “crowd filtering” investment mentality.
Crowd Filtering The concept of crowd filtering, or utilizing the varied perspectives of a large group to assist in the decision-making process can be incredibly powerful. It can achieve a reduction of individual deal bias and minimize the “I’m not the Target Market” issue.
For venture capital, the crowd filtering of the angel network process can provide not only an initial validation of a strategic business model, but also an early validation of potential to impact a market by the market.