Angel Groups
Here is a little historical background/opinion about angel groups:
Angel groups grew in popularity in the late 1990s primarily because there were so many “hot” deals, angels wanted to make sure they didn’t miss the “next big thing.” By working together, angels could increase their exposure to deals and see more opportunities. Then, after the bubble burst, investors realized investing isn’t easy. It takes hard work. It actually requires due diligence, which can take 100 hours and often goes beyond any individual investor’s core competencies. By working together, they can dig deeper into more companies. Thus, the number of angel groups has grow even faster since 2001.
The math works in either of two ways. Working with, say, four other investors, reduces each individual’s workload to only 20 hours (five investors @ 20 hours = 100 hours). Or, if each investor still spent 100 hours, they would collectively put 500 hours into researching the company before investing. This should limit the bad investments.
What really happens more often than not is that the five investors all spend about 40 hours, thus reducing their time by 60% and doubling the total time (200 hours) spent in due diligence. This team approach, if it prevents one bad $50,000 to $100,000 investment, is well worth the $500 to $5000 annual membership fee to the angel group.
It isn't all about saving time and reducing risk. By pulling together a group with diverse experience, knowledge, and resources to bring to the companies in which they invest, the investor group can provide much more assistance to the company after they invest. Thus, their investments stand a better chance of success in generating strong financial returns. In theory, anyway.
This same "diverse team" approach can work for entrepreneurs, with more definitive results. Finding investors is not easy. It requires hard work and time. Instead of going at it alone, and spending many hundreds of hours preparing, identifying, approaching and negotiating with investors, it makes sense to work with others. Furthermore, fundraising requires expertise and knowledge beyond the typical entrepreneur’s current skill set. That is where I come in.
Please reach out to me and tell me more about your company and what you are looking to do.
Angel groups grew in popularity in the late 1990s primarily because there were so many “hot” deals, angels wanted to make sure they didn’t miss the “next big thing.” By working together, angels could increase their exposure to deals and see more opportunities. Then, after the bubble burst, investors realized investing isn’t easy. It takes hard work. It actually requires due diligence, which can take 100 hours and often goes beyond any individual investor’s core competencies. By working together, they can dig deeper into more companies. Thus, the number of angel groups has grow even faster since 2001.
The math works in either of two ways. Working with, say, four other investors, reduces each individual’s workload to only 20 hours (five investors @ 20 hours = 100 hours). Or, if each investor still spent 100 hours, they would collectively put 500 hours into researching the company before investing. This should limit the bad investments.
What really happens more often than not is that the five investors all spend about 40 hours, thus reducing their time by 60% and doubling the total time (200 hours) spent in due diligence. This team approach, if it prevents one bad $50,000 to $100,000 investment, is well worth the $500 to $5000 annual membership fee to the angel group.
It isn't all about saving time and reducing risk. By pulling together a group with diverse experience, knowledge, and resources to bring to the companies in which they invest, the investor group can provide much more assistance to the company after they invest. Thus, their investments stand a better chance of success in generating strong financial returns. In theory, anyway.
This same "diverse team" approach can work for entrepreneurs, with more definitive results. Finding investors is not easy. It requires hard work and time. Instead of going at it alone, and spending many hundreds of hours preparing, identifying, approaching and negotiating with investors, it makes sense to work with others. Furthermore, fundraising requires expertise and knowledge beyond the typical entrepreneur’s current skill set. That is where I come in.
Please reach out to me and tell me more about your company and what you are looking to do.