Who Else Should You Involve?

Who Else Should You Involve?

November 11, 2021 by investor

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 for students from the investing by the angels.

In most cases, you’ll need to set up a separate legal entity for the angel members’ investments.

The legal counsel of the university can help set the boundaries of what is done inside the university and what is done outside.

Angels participating at university events need to make clear what role they play in the event — providing mentorship or making investment decisions.

If the group decides to set up a fund, this will be placed in the outside legal entity.

Also, deep-dive diligence and investment decisions should be placed in the outside entity.

Students who participate as paid interns can work for the outside legal entity and engage in the investment process.

Before launching, check with the legal counsel of the university regarding the functions of the angel group.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.