Building Angel Groups / Networks.

Building Angel Groups / Networks.

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Building a new Angel organisation may be divided into two elements, Network Design and Establishment, and Network Manager Training.

The final design of the network will influence the nature of training required for the Network Manager. For example a “manager led” network, in which the manager has primary responsibility for deal sourcing and deal making, will require more in-depth management training than would be required for the manager of a network designed to be more of an introductory service, where the individual members are expected to do the majority of the work in relation to due diligence, deal completion and post investment support.

Any project intended to assist the establishment and angel organisation should help to design the most appropriate structure and operating process to meet the specific needs of the local Angels. Based on local needs the areas of assistance to be provided may need to include:

  • Refinement of the operating budget for the network.
  • Funding sources (membership fees, sponsorship etc.).
  • Development of the network manager’s role and job description.
  • Meeting structures / timing / frequency.
  • Public relations.
  • Establishment of investment criteria.
  • Membership rules / Code of ethics.

The assistance should provide guidance as to how to maintain network momentum and membership to ensure future sustainability. The life cycle between initial investing and successful exits can be long. Depending upon the nature of the investee company, and the form of investment, an exit can take many years, a considerable time to keep members interested and active. Tactics to build long-term momentum may include:

  • Ensuring appropriate attention is given to the social aspects of the network
  • Practical issues such as the timing and location of meetings to encourage membership participation
  • Participation in other wider group activities
  • Ability to leverage the group for personal and intellectual development such as judging entrepreneurial competitions and mentoring young entrepreneurs
  • Active participation of members in the investment process, through membership of screening committees, due diligence teams and participation on portfolio company boards.

The specific activities relevant to any individual new Network will depend upon the nature, motivation, objectives and availability of their members, and may change over time as membership grows and develops.

The level of investment knowledge and skill required at the outset of a Network will depend upon the degree to which the manager is expected to “process” investments and the amount of work individual members are able / willing to take on. This will depend on the nature of the initial members, and may well evolve over time. The following sets out the range of training that we have delivered in the past, depending on specific network needs and available time:

  • Day-to-day operation of the network.
  • Member recruitment & relations.
  • Deal flow management.
  • Investment screening evaluation and post pitch processes.
  • Managing the membership (including how to get rid of inactive/disruptive members!).
  • Building and maintaining the network culture
  • Developing a suitable ongoing training program for the network Angel members.
  • Meeting structures / timing / format.
  • Public relations
  • Getting investments done!
  • The development of various documents and guidelines including (LINC have an extensive library of examples which we will share):
    • Investment screening criteria.
    • Confidentiality agreements.
    • Guidelines for presenting companies / “standard” pitch decks.
    • Scoring criteria for investment opportunities.
    • Term sheets and other legal documents.
    • Due diligence schedules and process documents.

 

Building a viable angel organisation does take time and resource. Given that the prime source of funding for new high growth potential businesses, and the associated economic benefits, are organised angel groups it is appropriate for government to invest in ensuring their viability and effectiveness.