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There are many things to consider when starting an angel investment group. What kind of deals you will pursue, how much you will invest, and who will be on your team are all things you will need to consider during the planning process. Below are some tips and best practices for recruiting members, branding, and allocating funds for your angel investment group.
It’s important to recruit members to join your angel investment group. The first step of recruitment is showcasing the deals you have to prospective investors to gauge interest. Send them recently funded deals as an example of the type of deals your group offers. You can also give them access to all of your deals for a period of time and then see if they want to join.
Network through your current investors to find potential new members. Have the current members bring friends and colleagues to the presentation meetings and invite them to invest in deals the members are funding. Provide the returns for the group to show the track record. It helps to have a fund that investors can join for those who don’t have the time to review specific deals.
For every four investors who want to participate, three will join the fund and one will join the group. Setup a syndicate that takes care of the diligence and makes it easy for investors to join the deals. Make the goal and mission of the group clear to prospective investors as the why is stronger than the return in gaining new members.
Branding Your Group
In running an angel network it’s important to establish a brand for the group and to then promote it. Branding can make your group appear larger and shows it is an established and well-thought organization. A brand consists of a unique name, logo, mission statement, and mantra.
Your brand helps your group stand out from the crowd. It helps build trust and is a promise to the investors and startups you serve. It helps people remember your group by giving them a name to associate it with. A brand also helps attract investors as investors want to belong to a group that stands for something. Finally, a brand helps attract startups. Startups need to recognize your group as a viable source of funding for their company.
In preparing for Startup investing, determine upfront how much you are willing to invest. In general, it’s best to keep your startup investing to 3-5% of your discretionary investment funds- funds you can lose and not impact your lifestyle or other investments.
When determining how much you plan to invest, use a five-year window. Separate these funds from the rest of your investments to make it easier to manage the process.
The amount you invest per deal will determine what platforms you will use. You invest $5K you will most likely be on an online funding platform. If you invest $25K you can join a group and invest with angel investors. If you invest $50K you can join a syndicate. And if you invest $100K or more you can invest through investment banks.
Feel free to try out our calculators and contact us if you would like to discuss your fundraise: https://tencapital.group/calculators/
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: email@example.com.