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Angels Finding Strength in Numbers

Carl Filbrich | Apr 15, 2009

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Once upon a time, the typical angel investment involved one or two individuals putting money into an enterprise started by a friend or family member. That type of investment is still widespread, and still vital to economic development. But one of the most important investment trends in recent years is the growth of groups or networks of angel investors who come together to share risks, knowledge, and rewards. If you want to be an angel investor, you don’t have to go it alone.

There are several reasons why angel investing is becoming more of a group activity. Perhaps the most important is that angels are taking on larger and larger projects. Established venture capital firms have become increasingly cautious in making investment decisions — especially when it comes to initial funding — and angels are stepping in to fill the void.

Larger projects obviously have larger capital requirements, but that’s not the only reason why angels are coming together to pool their resources. Larger projects also require more business experience and expertise. Groups of angel investors typically include members with a variety of business backgrounds. Besides providing funds for startups, they can offer the kind of coaching and mentoring that many budding entrepreneurs need. Angels can strengthen the management team, introduce best practices, and help create strategic plans.

The members of an angel investment group learn from each other as well. The typical group includes both novices and veterans. You don’t have to an expert to join.

Angel groups often come together around a common theme. For example, a group might specialize in clean energy or retail or hospitality. The members of the group feel more comfortable putting money into a venture because they understand the business they’re investing in.

Angel investing groups are springing up in key financial centers throughout Asia. According to Singapore Investment Network, 3.5% of adults in Singapore have made angel investments, and a growing number of these investors belong to groups.

Whether or not you belong to an investment group, Venture Hype offers a great opportunity to expand your investing horizons and get in touch with like-minded people — people who love the promise and the possibilities of angel investing.

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Filed Under: Angel Group

* Please be civilized. Comments that include ad hominem attacks or destructive criticism will be removed.

Orrymain

I'm very much intrigued by the entire concept of angel investing. I really hadn't been aware that it took on so many different angles, such as the syndicate as mentioned in another article and in fact, venture companies. I always thought of it as a solo adventure, so to speak. I continue to learn from my time here, not just with the articles themselves, but the comments.

The Hyper Team @ Venture Hype

Thank you for visiting often. The articles provide points of discussions but it's through the comment area that we get to interact and learn from each other.

In fact, angel investing can be a team or solo sport. For new investors, it's best to co-invest, to both spread the risks as they learn the ropes. Although some seasoned investors prefer to invest solo, they might co-invest if the financing round exceeds their usual investment range.

sybil

I guess i fall on this category, an angel investor and i quote "You don’t have to an expert to join." I am a novice in here and still in a shady part, that need enlightenment and support from you guys.

The Hyper Team @ Venture Hype

That's the exact reason why we're here! To seek out useful information and share with all, with the hopes of turning "thinking" angels into "acting" angels. Do let us know if you have any questions!

The Hyper Team @ Venture Hype

Thanks for everyone's comment. Quite a consensus. Aaron discusses the differences between member-led and professionally-managed groups in his recent post, From Chaos to Order: How to Manage Your Angel Group. Take a look if you're interested in organizing an angel group in the future.

vlada

Well, it's very old and very good principle that the strength increases with numbers. And I'm sure that it is an absolutely right decision that Angel investing groups are springing up in key financial centers throughout Asia. I think that the investments into the Asia will be the most profitable in the nearest future.

Kejatz

I think in this day when all investment carry some risk with them, investing alone is not an option. It is much wiser to share risk, share the possibility of mistake and the mistakes themselves with other investors. But most important thing of not being alone is gathering important experiences of a group and improving the odds for successful investment.

Cogbuddy

I prefer the group because if we do any mistake, there will be another one to correct us. Similarly we can share the successful tips with others. It is easy to copy the successful formula rather than to try it ourself and succeed. It will take some time. But we must see that there is no person in the group trying to dominate others.

The Hyper Team @ Venture Hype

Angel groups are either member-led or professionally managed by non-affiliated managers. We'll compare and contrast the two in an upcoming post so you can learn more about their respective pros and cons.

cirereyes

I think a group of investors would be better because there will be a lot of sources of funds for a project. And I believe a business that was started by a group of angel investors will be more stable because there will be a lot of ideas that can be gathered and shared to achieve the goal of the organization.

Sanjay Uplana

I am agree with the concept. A single and risky investment is no match to the exciting scenerio available in the group investment concept. A group can perform the market research in a fast and effecient way which is necessary prior to any investment. Also in the condition of any loss, you are not alone and a financial help is always available.

tongyun

As the saying goes, "there is strength in numbers" and that is probably the main benefit or working as part of a group of angel investors. However, groups are not always good. When run poorly, they can stifle and smother members of the group and end up sabotaging their progress. However, when a group is well run, amazing and wonderful things often happen.

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