Angels often form angel groups to increase their deal flow, share the due diligence (DD) work involved and team up to raise larger amounts of capital. If one angel finds two new deals per week and joins forces with 24 other angels, then their combined deal flow increases from two to 50. By joining forces they start to be able to invest enough money to truly capitalize their startups. Putting $25k into a $1m investment round with several other angels makes sense. An angel would be smarter to make 20 investments of $25k each than two investments of $250k each. This is why we created Georgetown Angels. Our mission is to unite the most powerful angels to create a formal network of angel mentors to add value beyond just commodity cash. Register for our next events in New York City, Washington DC, San Francisco, Silicon Valley and Austin, Texas. Our group is totally open to non-Georgetown angel investors and non-Georgetown startups seeking funding.
Typically the angel group creates a new Limited Liability Corporation (LLC) for each investment or a series LLC structure. As angels wire money into the LLC account, the LLC issues ownership units in the LLC or series. This way the angel group becomes one single shareholder in the startup and the startup has a clean cap table and easy to manage single shareholder. When it comes to voting rights, the LLC votes and there is no need for the CEO of the startup to track down 15 different angels that are all spending the winter on their sailboats in the Caribbean. Pledge funds can operate on a similar basis.
If you want to make seed investments, co-invest with VCs in Series A & B rounds or invest in later stage pre-IPO companies expected to exit in 1 to 3 years – get in touch. We are investing in seed rounds, venture rounds and later stage deals where we are providing liquidity to founders and early stage investors. Contact me and we can discuss how we are doing these deals. Right now angels can invest in seed deals and now for the first time angels can be the last money in before the IPO. This is new and was previously not possible.