Some Angel groups, such as Angel One Investor Network and VANTEC, have formalized the role of lead investor as the primary point of contact with the entrepreneur. They follow a lead investor guidebook that clarifies the specific responsibilities of this critically important person who not only leads the negotiations with the entrepreneur, but also is the primary contact for all the Angels co-investing in the deal and any contractors involved (such as legal counsel). Another example is provided by Frank Erschen regarding GTAN: “Since its formation in 2009, several Angels have stepped forward to take the lead role in deals. This evolved naturally. It soon became evident that the lead role was critical for coordinating multiple Angels, performing due diligence, and negotiating and closing the deal. It then became clear that the number of Angels who could, and would, take the lead role was the determining factor in getting deals done. “GTAN continues to be very efficient at qualifying investees through their selection committee, but when investees pitched at GTAN’s monthly Angel meetings, if there wasn’t an Angel who could take the lead role, due diligence was slow or wasn’t initiated. In response, GTAN instituted an education program for Angels and encouraged more Angels to take lead roles. Deal leads also had the ability to call on more-experienced leads for help.”
Angel Fund Manager-Managed
Angel Group Manager-Managed
Lead Investor
Lone Wolf
Continuum of Involvement
Angel Fund Member-Managed
Angel Group Member-Managed
Personal Network of Angels
Angel Sidecar Fund
There is a continuum in levels of involvement, from Lone Wolf to lead investor to co-investor to investor in an Angel fund or Angel sidecar fund. In an Angel fund, Angels pool their capital and invest in a fund that makes investment decisions. An Angel sidecar fund is similar, but instead of making its own investment decisions, it co-invests alongside other Angels when certain trigger conditions are met (such as at least five Angels from the group making an investment of over $500,000). Company Angel Co-Investment
Angel Fund Investment
Angel Fund
Company
Angel Sidecar Fund Investment
Angel Sidecar Fund
Company
28 A Practical Guide to Angel Investing: How to Achieve Good Returns
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