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ANGEL ORGANIZATION CHALLENGES
for angels investing on their own but too small for institutional investors, both by making larger initial invest- ments and follow-on investments. Having the financial capacity to make follow-on investments also gives investors some protection against dilution, from not being able to follow their money and from the power of venture capital investors. The professionalism of angel orga- nizations also makes them credible partners for institutional investors and public sector co-investment funds in larger syndicated deals. Indeed, by partnering with angel organizations, public sector co-in- vestment funds are able to leverage their expertise, and thereby avoid
the high management costs of run- ning their own venture funds.
investors. In addition, the growing diversity of angel groups helps en- trepreneurs in the screening and pitching process. Diverse founders may be more likely to build rapport and resonate with members of an- gel organizations than with individ- ual angels. Finally, angel organizations provide entrepreneurs with access to re- sources other than capital, includ- ing pre-and-post-investment men- toring, introductions to members’ professional networks, and ongoing business guidance, such as angel representation on startup boards. These factors are often seen as key in nurturing entrepreneurs and in-
Fifth, angel organizations enhance the amount of ‘smart capital’ in the market. Bringing together individu- als with diverse backgrounds, exper- tise and skills enhances the ability of angel organizations to undertake due diligence and add value to their investments beyond the capability of an angel investing on their own. Many angel organizations offer their members training programmes, with many leveraging resources offered by NACO, thereby raising their com- petence. Angel organizations are able to leverage the investments of passive investors with that of active
BY PROFESSOR COLIN MASON
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