Angel groups are collections of investors that share deal flow and diligence. They typically invest in high-growth companies in large markets with great teams and disruptive business models or technologies. Investments are usually made through equity stakes at a negotiated share price, with the hope that the share price will increase upon exit. Angel groups can bring significant funding and business experience to early-stage deals, along with large referral networks and domain expertise, but their investment process is typically slower than individual investors, taking 2-6 months.

1. www.thecapitalnetwork.org
Ben Littauer
March 22, 2016
WORKING WITH ANGEL GROUPS

2. www.thecapitalnetwork.org
WHAT ARE ANGEL GROUPS?
• Collections of Investors sharing deal flow and diligence
• Most comprise individual investors, some are funds
• Some have a specific focus
• Domain – tech, life sciences, food, education, etc.
• Location
• Demographic – women, minorities, etc.
• “Double bottom line”

3. www.thecapitalnetwork.org
WHAT ARE WE LOOKING FOR?
• High growth companies in a large market
• Great team
• “Unfair advantage”
• Disruptive business model
• Disruptive technology
• Network effect
• Green-field
• Intellectual property

4. www.thecapitalnetwork.org
HOW DO WE INVEST?
• Investments typically are equity
• We get a percentage of the company at a particular share
price
• We hope to “exit” at a share price which is a (large)
multiple of our original price
• We hate, but still use convertible debt
• Structured as debt, but really meant to be equity
• Many epicycles to fix issues may complicate (caps,
governance)
• Others being developed: SAFE, KISS not yet common here

5. www.thecapitalnetwork.org
HOW DO YOU FIND US?
• Prior Investors
• Other introductions
• Accelerators
• Incubators
• Networking venues
• Web sites
• Useful only for determining “fit” and finding networking
leads

6. www.thecapitalnetwork.org
PROCESS
• Pre-screening and screening
• Referral is the key to entering process
• Pitching
• 10-20 minute presentations + Q&A
• “Due Diligence”
• Varies between groups and deal leads
• Term sheet negotiation
• This is setting a market price, not a valuation
• Syndication and Funding
• Repeat

7. www.thecapitalnetwork.org
ANGEL GROUPS, PROS AND CONS
• Cons
• We’re slow, typically 2 -6 months
• We’re lemmings
• Pros
• We can bring a lot of money to an early stage deal
• (“we’re lemmings” works in your favor!)
• We bring a lot of business experience
• We bring a huge referral network
• We often bring deep domain expertise
• We are often more “balanced” than individual investors