While individual Angels are incredibly important, there is only so much one person can do alone. Few Angel Investors have the time or financial resources to find and fully fund a portfolio of 10 or more companies themselves; instead they join with other Angels to share the work and pool their resources & expertise. As Angel investing has matured, many parts of the world have seen more and more individual Angels starting to coalesce into Groups and Networks with the goal of sharing deal flow and due diligence work, and pooling their funds to make larger investments Angel investment Groups are a tried and tested way for Business Angels to share the financial and non-financial burdens, spread their risk and achieve the financial clout necessary to negotiate more favourable terms.
Group members act together to achieve better results but they still make individual investment decisions.
Groups can vary in size from small informal groups of two or three members to large, highly organised groups with over a hundred members. They combine under a common brand with defined rules of membership and conduct to collectively identify, review, select and evaluate Angel investments.
In many countries this term is used interchangeably with Angel Group. However sometimes an Angel Network may be no more than an online community or mailing list of potential and/or active Angel Investors. Angel Networks are often centered on business support organisations, acting as introductory organisations between those who are seeking funding, and those with capital to invest. These service providers then encourage entrepreneurs to provide proposals and charges each entrepreneur for listing their business for angels to review and decide whether to invest. Angel networks can improve deal screening processes by allowing multiple ‘checks and balances’ by pooling a diversity of knowledge about the market, management and financial assumptions.
Angel networks and groups can have an influential voice collectively when raising regulatory and policy issues with governments. This can contribute to the creation of new and better policies which create the environment for more efficient and effective business growth. An increasing number of Angel investors are recognising the benefits that both Angel groups and Angel networks can bring to their investments and are the membership as well as the number of these groups and networks continue to grow.