Why Investors join an Angel Investor group or network

Solo Angel Investing is time consuming !!

An individual Angel investor has little support for due diligence, deal structuring, diversification through co-investing and then post investment collaboration and problem solving.

  • Sourcing of good quality deals takes time.
  • Meeting entrepreneurs takes travel and meeting time.
  • Reading all of the business plans consumes hours.
  • Conducting alone, the 40+ hours of due diligence required.
  • Need for opinions from friends and third party expertise.
  • Can you understand and negotiate term sheets solo?
  • Legal support costs are not shared and can be expensive.
  • Post-investment problem solving

Experienced angel investors are finding better success through investing only as a part of a co-investing group.

Recent US Angel Capital research Returns to Angel Investors in Groups 

  • Due Diligence: Angel investors reported the median length of time was 20 hours. Where investors spent more than 20 hours the return was 5.9x (in 4.1 years). If less than 20 hours, the return was only 1.1x (in 3.4 years).
  • Industry Expertise: Investment return multiples were 2x as high for investments in ventures connected to investors' industry expertise.
  • Interaction with Portfolio Companies: Angels who interacted a couple of times per month experienced an overall multiple of 3.7x in four years versus 1.3x for investors who only participated a couple of times per year.
  • Follow-on Investment: 29% of investors made follow-on investments, but had returns of only 1.4x, lower than the 3.6x for investors who did not made a additional investment. More research to understand why.
  • Formal VC Investment: 35% of companies took on VC investment after angels invested, but the returns were not higher. With VCs there were more failures & larger exits, but without angels saw exits of 1x to 5x.
  • Overall Returns: Seven percent of the exits achieved returns of more than 10x the money invested.

Sharing Expertise, Due Diligence, Syndication and Problem Solving: 

The objective of Angel co-investing / deal syndication is to reduce investment risk, diversify investor portfolios, increase the value of Angels to company Founders (by providing additional funding and access to expertise), plus enabling early stage investors to be in stronger negotiating position with those considering follow on financing. Investors working as a team can substantially influence the course of a portfolio company – a luxury rarely afforded an individual investor.

Whether it’s because individual investors see safety in numbers, a stronger negotiating position for future rounds, better diligence through shared efforts, or just a more enjoyable process by working in teams, the basic principle is a classic division of labor. Rather than have each investor repeat the whole diligence and investment process each time, work can be divvied up to those with the most skill for a particular task—allowing a lead angel or manager to coordinate the process for both individual investors and the entrepreneur.

Registered Members can leverage the diverse expertise and business experience of the other Angels both before and after an investment. Angels can agree to offer their business advice and network to all the portfolio companies, even ones in which they are not personally invested. The diversity of the Angels at the Angel Forum also leads to an impressive deal flow that is large, high-quality, and diverse.

Angel Forum uses a web based co-investment / syndication software to automate company funding requests, deal management and investor collaboration. Registered Investors are invited to use this process. 

 

Join the Angel Forum to share expertise, work and socialize

  • It is the public buffer that saves your privacy
  • Pre-screening improves quality of deal flow
  • Dividing up due diligence work eases the pain of 40+ hours required
  • Variety of industry sector experience available
  • Pick and choose the deals you like – not what a fund manager likes
  • Negotiate term sheets with the strength of a group of investors
  • Share any legal costs
  • Social camaraderie among like minded investors
  • Problem solving with like minded investors
  • Great potential for deal syndication with other groups
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An Angel Forum member is:

  • An active private equity investor and a trusted, honest and respected member of our business community,
  • A contributor of time, wisdom and experience to companies and soon to-be-funded companies,
  • Someone who enjoys building relationships with other members and companies we fund.

Accredited Investor, has to have an individual net worth exceeds $1 million (excluding your primary residence) OR your income has been in excess of $200,000. See BC Securities Regulations for exact definition.

Angel Forum Annual Member benefits include:

  • No meeting attendance fees (and you may bring a guest)
  • Access to confidential angel website (for deal-flow, due diligence, etc)
  • Discounts to edcucation courses and workshops on topics ranging from Due Diligence, Valuation, Term Sheets and Post Investment Relationships, Exit Strategies, Market Research and Company Directorship.
  • Automatic Associate membership in the U.S. Angel Capital Association (ACA) and the Canadian National Angel Capital Organization (NACO). and Annual Members of the Angel Forum, enjoy conference and workshop discounts.
  • And – importantly – the ability to syndicate their angel deals.