Discussion Topics

What Is the Mission of the Group? In starting an angel group at a university, the key mission of the group is not to make money. Supporting the university by providing students with a quality academic experience and job placement is the primary goal. Alumni who join the angel group will see that mission as […]

Providing Mentorship to Startups Angel groups are often asked to provide mentorship to startups. Here are some best practices for engaging your angel investors into mentorships with startups: Start by matching the investor with the startup based on the business model, sector, and stage of business. Identify a specific challenge the company is facing and […]

Who Else Should You Involve? In launching a university angel network there are legal considerations specific to the university to keep in mind.  A university is a non-profit and therefore cannot participate in startup investing. The first step in launching a group is to contact the university legal counsel about how to separate the mentorship […]

The Two Keys to Success A university angel network is a group of investors formed around the affinity to a university. The primary goal of it is to provide student experience and job placement. Making money from the investments is secondary. There are two keys to successfully launching an angel network at a university. The […]

Why Start a University Angel Network? A university angel network is a group of investors formed around the affinity to a university. It typically consists of alumni and supporters of the university. So why start an angel network at a university? It’s a great way for alumni to connect back to their alma mater. The […]

Why You Should Move Your Angel Group Online As the world moves online, so you should move your angel network online as well. This includes your screening process, presentation meetings, diligence process, and education sessions.  The screening process can be made more efficient by capturing 1-3 minute pitch videos from those applying to pitch to […]

Meeting Considerations In setting up your angel network you’ll need to set up the meetings. Here are some key points to consider: 1. How many deal flow cycles are you planning? 2. Are you online, in person, or both and at the same time? 3. How will you set up the screening meeting, the presentation […]

Working With Other Angel Groups In setting up an angel network, it’s important to build relationships with other angel groups. Here are some key points to consider: 1. Other angel groups can provide additional deal flow to your group. 2. They can provide follow-on investment for your funded deals. 3. They can provide expertise and […]

Sponsorship Issues Sponsors bring needed financial support to the angel network. Here are some key points for managing sponsors: 1. Keep the number of sponsors low so it’s easier to manage. 2. Allow a limited number of sponsor representatives to join the meetings so they don’t overwhelm the members. 3. Set the rules of engagement […]

Consider Service Providers In setting up an angel network, it’s important to have support from services providers such as lawyers, accountants, and financial advisors. Startups will need legal, accounting, and financial support. Review your community for current service providers who are already helping the startups. Assess the skills of the providers to see if they […]

Educating the Members In running an angel group, it’s important to educate the new members on how to invest in startups. Most new members will not have experience with startup funding. It’s important to set up an education program for the members. The members will receive education through the process of screening the deals, negotiating […]

Communicating With Members In running an angel group, it’s important to communicate your membership criteria and organizational structure to prospective members. The website and associated documents should make clear not only the membership criteria, but also the process to become a member, and how the group is structured. It also should make clear the process […]

Setting Membership Criteria In setting up an angel network, you need to determine the membership criteria. Here are some points to consider:  The Securities and Exchange Commission or SEC sets the investor criteria to allow for investments into startups. Members must meet the SEC criteria for accredited investors. Make clear the goals of the group, […]

Funding the Angel Network Program In setting up an angel network, you need to fund the program.  Here are some funding sources to consider:  Most angel networks charge a membership fee to cover the expenses for running the program.  For those groups using the fund structure, a management fee or carry can be taken from […]

Choosing the Investment Structure In setting up an angel network, you need to choose an investment structure. Here are some structures to consider:  Individual investments — the members can each decide if they want to invest and how much to invest in each deal. This allows for maximum flexibility for the members to invest in […]

Choosing the Regulatory Environment As angel networks expand across the globe, those groups outside the U.S. should also consider their local regulatory environment before launching an angel network. Here are some points to consider: 1. Is there a legal environment that allows for investment structures for venture funding? 2. Are there any restrictions on the […]

Choosing the Legal Structure There are several legal structures to use when setting up your angel network. Most angel networks form a Limited Liability Company or LLC. This gives the angel network a legal entity with which it can conduct business. The members often pay an annual fee to fund the operational activities of the […]

Choosing the Organizational Structure There are two ways to organize your angel network: member-led or manager-led. Member-led groups let the members source deals, lead the investments, and recruit the members. They hire staff members to handle the administrative tasks. Manager-led groups hire experienced professionals to perform key functions such as determining which startups to fund.  […]

Challenges in Angel Investing Angel investing can be fun and financially rewarding to the investor as well as helpful to the startup. It can also be challenging. Here are some challenges to consider: Angel investing requires hands-on work with the startups not only in funding but also in supporting them after the investment. Angels often […]

The Benefits of an Angel Network An angel investor will find many benefits in joining an angel network. The angel network can build resources to share with the angel such as due diligence. This is time-intensive work, so it helps to share the load. Angel networks provide more and better deal flow than individual investors […]

Should You Start an Angel Network? Before launching an angel network, assess your community as follows: 1. Do you have accredited investors interested in startup investing? 2. Do you have any investors who will take the lead on diligence and investing for each deal? 3. Do you have a champion who will organize and lead […]

In running an angel group, it’s important to provide regular reports for the investors about the investments as well as the state of the group.  For individual investments, negotiate regular updates from the startups to include the following: – Sales reports tracking leads, pipeline, and closed sales on a monthly or quarterly basis. – Financials, […]

A key part of angel investing is negotiating terms with the startup. It’s important to take time to negotiate good terms for the investors in your group. Key areas to focus your negotiations include the following: Valuation – this is the most important term as it determines equity ownership and is the primary determinant of […]

In running an angel network, it’s important to drive the funded startups toward an exit. Investors funded the companies with an expectation of a return typically in the 5 to 7-year timeframe. While some startups will fail and shut down completely, most startups continue as ongoing businesses. It’s important to review the status of those […]

After investing in a startup, it’s important for the angel investor to determine their role with the startup. There are several roles to consider: The investor can take an advisory board seat and provide coaching to the startup on an informal basis. The investor can take a board seat and help guide the founders through […]

There’s risk in startup investing as most investments don’t pay a return to the investor. In running an angel network, one must take steps to mitigate liability. It’s a best practice to have all members sign liability waivers stating they understand the risk of startup investing and take responsibility for it. The waiver should indicate […]

 In running an angel network, it’s important to set up a due diligence process. Diligence can take a substantial amount of time, so there needs to be a prescribed process for the members to follow. The process needs to be led by those with experience in diligence and startup investing. It starts with gathering core […]

In running an angel network, it’s important to set up several sources of startups seeking funding called deal flow. The best source is angel group members. Continually check with your members to see what deals they’ve seen or heard about. Other sources include the following: Incubators and accelerators often have deals, although most of the […]

The deal screening process is a key program for an angel group. The process needs to capture all available deals in one place for review. For each deal, sufficient information must be provided by the startup including their revenue, sector, product stage, and fundraise sought. The screening process can be done by the group as […]

In running an angel network, consider using online events for the program. Here are some key tools for creating successful online events: A website. This keeps track of scheduled events with information about each one including the name of the event, description, who should attend, and associated documents. Event registration. This page gives information about […]

Warrants give the holder a number of shares to be exercised over a specified period to buy the company’s stock.  Warrants play a key part in venture debt. Companies offer warrants in exchange for a lower interest rate on the debt. Investors offering venture debt use warrants to gain access to the equity upside of […]

Litigation funding provides investments to businesses seeking to litigate a lawsuit.  Lawsuits come from businesses suing other businesses, tenants suing landlords, startups defending their intellectual property claims, and more. The one pressing the lawsuit needs funds to carry it through the courts.  Investors receive a return when the business wins the lawsuit and pays the […]

Revenue-based funding makes a startup investment and pays back the investor at the rate of top-line revenue. This aligns the investor and founder to the same goal – to create a business and grow sales.  The higher the sales, the faster the payback to the investors and the higher the compensation to the founders. Revenue-based […]

Salary-based funding makes a startup investment and pays back the investor at the rate of compensation the founders take. This aligns the investor and founder on the same goal, to create a business that can sustain itself and pay the team. The investors receive an agreed-upon percentage of any salary or profit the business takes […]

As your company grows and the equity becomes worth more, there comes a time to switch over to debt funding. There are several forms of debt to consider. Each one is used for a different application.  The primary options are as follows: 1. Traditional bank loan – requires a personal guarantee and is most often […]

Growth startups can raise not only funding for equity but also funding for debt called venture debt. Venture debt doesn’t dilute the founders and provides capital to continue the growth. Here are some key terms and conditions to know when looking for venture debt: There are term loans and revolving lines of credit with maturity […]

Venture debt is not for every startup or for all fundraises. It is best used in conjunction with an equity raise. The equity funding provides ongoing working capital that doesn’t need to be paid back. It works well between equity raises from institutional investors. The business must be up and running with stable revenue. Those […]

Venture debt can reduce dilution and give your startup more runway. Here are a few pointers to see if venture debt is a good fit for your fundraise: It’s often used with equity funding for purchasing equipment, making acquisitions, or making up for funding not acquired through the equity raise. If the company is in […]

Venture debt is on the rise in the startup world as more startups find it a useful part of their fundraise strategy. It’s a form of debt financing for venture-backed companies that lack the assets for traditional debt funding.   Venture debt has been around for as long as venture capital has been writing checks for […]

There’s an old saying in the angel world: If you want money, ask for advice. If you want advice, ask for money. In raising funding, most founders spend their time selling the idea to the investor. An alternative approach is to collaborate with the investor. The selling approach uses the entire ten-minute pitch talking about […]

Founders need to bring startup mental models to bear on their business. Here’s a list of key mental models to know: 1. Least worst option — use this model when all options are not ideal. 2. Jobs to be done — use this model to discover how your product fits into the customer’s workflow. 3. […]

In pitching your business, investors will ask questions about metrics such as customer acquisition cost, lifetime value, and churn rates. The purpose of the question is to discover what systems you have built into the company and how robust they are. In the early stages of a startup, the CAC, LTV, and revenue growth metrics […]

In running a startup, time management is a key skill for the founder.  Here are some key steps in managing time: 1. Set up a schedule with standard meetings, routines, and to-dos that recur each week or month. 2. Schedule your day in advance so you’re ready to execute the day when it comes. 3. […]

In pitching your business, focus on the benefits your product or service provides rather than listing out the features. Features answer the question — what, or what is it? Benefits answer the question — why, or why do you want it? In pitching your business, go beyond the features of the product to show why […]

In pitching investors, there are many ways to blow the pitch. Here’s a list of common mistakes startups make: Losing your temper and letting emotions get the better of you. Investors want level-headed people they can work with. Building the company only for the exit.   There must be a “why” behind the business. Inability to […]

In running a business, it’s important to use written contracts. It’s easy to negotiate an agreement verbally, but this often leaves loose ends that become a problem later. A written contract makes clear the responsibilities and duties of both parties and what each owes the other. It’s often the case that both sides make assumptions […]

In raising funding, you must have a growth story. Investors want to know your business is in motion with momentum and traction. Investors look for activity in four areas: sales, team, product, and fundraise. These are the factors under the control of the startup.   Other factors such as competition, market size, and growth are not […]

There are basic principles around fundraising that apply in every situation. First, the most important step in fundraising is to build a relationship with the investor. The more you know the investor and the more they know you, the better the outcome. Second, demonstrate results in every contact. Never show up without a currently relevant […]

Many entrepreneurs fail to build a financial forecast claiming they cannot predict the future. The purpose of the financial forecast is not for future predictions, but rather for communicating the business plan to the investors. From the forecast, the investor learns what growth rate the entrepreneur is considering. The forecast shows where break-even may come […]