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An Angel Network or an Angel Group is a group of investors in a formal network for the purpose of investing in early stage companies. The network allows members to share research and pool their investment capital.
Description
editHistory
editBeginning in the late 1980s, angels started to coalesce into informal groups with the goal of sharing deal flow and due diligence work, and pooling their funds to make larger investments. Angel groups are generally local organizations made up of 10 to 150 accredited investors interested in early-stage investing. In 1996 there were about 10 angel groups in the U.S.; as of 2008, while there are no official statistics, data from the company that provides deal management services for the majority of organized Angel investors indicates there are over 300,[1] with a roughly equal number in all other countries combined; these groups accounted for approximately 12,000 individual angel investors in 2008. The more advanced of these groups have full time, professional staffs; associated investment funds; sophisticated web-based platforms for processing funding applications; and annual operating budgets of well over US$250,000.
The past few years, particularly in North America, have seen the emergence of networks of angel groups, through which companies that apply for funding to one group are then brought before other groups to raise additional capital.[2] The development of the Angelsoft network, connecting a majority of existing angel groups, has led to an increase in the syndication of investments among more than one group.[3]
Angel investing in the UK
editA study by NESTA [4] in 2009 estimated that there were between 4,000 and 6,000 angel investors in the UK with an average investment size of £42,000 per investment. Furthermore, each angel investor on average acquired 8% of the venture in the deal with 10 per cent of investments accounting for more than 20 per cent of the venture.
In terms of returns, 35 percent of investments produced returns of between one times and five times of the initial investment, whilst 9 per cent produced returns of multiples of ten times or more. The mean return, however, was 2.2 times investment in 3.6 years and an approximate internal rate of return of 22 per cent gross.
