Funding 101: Prep


Angel Investor Groups

Angel Investor Groups are a collection of individual angel investors that come together to source and review investment opportunities. The angel investor group may invest as a whole or in some cases they may split the investment among a few select angel investors who particularly like one deal.

Benefits of Angel Investor Groups

The most obvious benefit for the entrepreneur to leverage an angel investor group is to broadcast their deal to a large number of qualified investors at once. Unlike a venture capital firm that will often invest in only particular industries, the angel investor group is made up of many varied interests.

Going through the submission process is a convenient way to identify particular angels who might be a fit for your deal, even if the group as a whole doesn’t feel comfortable making the investment. Think about the group in terms of lots of prospects instead of just one.

Submitting to Angel Investor Groups

Most well-organized angel investor groups have a formal submission process by which they accept new business plans and determine which ones they want to follow-up with. In most cases you can expect to get an answer back from the angel group, even if the answer is a “no”.

These submissions can typically be done online. Members of The Network or Bizplan can automatically have their plans submitted to angel investor groups through our system to save some time and headaches.

Focused by Region

Angel investor groups tend to focus most of their investing regionally, as the investors themselves band together based on their geography. This winds up being particular helpful for entrepreneurs because they can reach a large number of angels close by without having to track them all down individually.

On the other hand, it also presents a bit of a challenge for entrepreneurs who may not be local to the angel group they want to pitch. There is no hard and fast rule here for every group, but pitching your local group is going to be a far better opportunity than trying to pitch an angel group in another state.

Getting a Sponsor

The best way to submit your plan to an angel investor group is through a “sponsor” in the group. Like any other investment deal, angels rely on other angels to provide some proof that a deal is worth looking at. Instead of trying to convince the whole group that your deal has merit, consider trying to approach one member of the group and having them introduce your deal. You’re likely to get a much better response since the group will be using the trusted value of that angel to look further into your deal.

Side Car Deals

In some cases the angel investor group as a whole may invest a portion of your total funding amount, with the remainder individually invested by specific members of the angel investor group. This is referred to as a “side car” deal because it’s connected to the larger investment that the group intends to make.

Side car deals are different than just having a few angels who choose to invest outside of the fund. The side car deals usually draft off the terms of the original angel investment but include more stock allocated to particular individuals.

Due Diligence

If things go well with your pitch to the group you’ll begin the Due Diligence process. At this point the group will assign a certain number of members to form a sub-committee to review your deal more closely. Often this is done so that they can assign people with much greater subject matter expertise in your particular market or field.

Due diligence can vary in depth and duration, but realize that the investors are just trying to make sure that everything you are telling them checks out. They want to make sure they understand where your projections are coming from, whether your product really works, and a little bit more about the people you have behind your idea. It’s a big commitment they are making, so you shouldn’t be alarmed that they will want to kick the tires a bit before making an investment.

Number of Active Angel Investor Groups

According to the Angel Capital Association (ACA), there are between 10,000 and 15,000 angels believed to belong to angel investment groups in the U.S. Just under 7,000 of them belong to 165 member angel groups that make up the ACA. The ACA estimates that there are about 225,000 people who have made an angel investment of some sort in the past two years.

Angel Investor Group List

We’ve put together a list of popular angel investor groups that you may want to reach out to as you begin your quest for capital. This is just a small sample though. For the complete list of angel investor groups, use the “Investor Search” feature on The Network.

Medical Growth Fund - Cleveland, OH

North Coast Angel Fund - Cleveland, OH

Queen City Angels - Cincinnati, OH

Ohio TechAngels - Columbus, OH

Akron ARCH Angels- Akron, OH

Rocket Ventures - Toledo, OH

Core Network - Toledo, OH

Central Illinois Angels - Peoria, IL

Cornerstone Angels - Northbrook, IL

Hyde Park Angel Network - Chicago, IL

Stateline Angels - Rockford, IL

Wildcat Angels - Evanston, IL

Illinois Institute of Technology Angel Network - Chicago, IL

P3 Alliance (Purdue Angel Network) - Indianapolis, IN

Irish Angels - Notre Dame, IN

Stepstone Angels - Indianapolis, IN

Phenomenelle Angels - Madison, WI

Silicon Pastures - Milwaukee, WI

Wisconsin Investment Partners - Madison, WI

Marquette University Golden Angels Network - Milwaukee, WI

Blue Water Angels - Midland, MI

Grand Angels - Grand Rapids, MI

Michigan Angel Program - Detroit, MI - email

RAIN Source Capital - St. Paul, MN