Over time, I’ve been a member of various angel networks. Some have worked OK, but most have been dysfunctional at best.
Then one day about a year ago, I went to lunch with some nice folks who happened to be angel investors. I knew one or two, and met three or four more at that lunch. So it was a small lunch gathering of 6 angel investors at one of their homes. No “staff” or “support systems.” Just lunch.
That group started meeting monthly for lunch. They’d tell each other about the deals they were looking at. If someone was interested in a company, they would set up simple meetings for each other. This has continued to be informal with almost zero process.
As of this week, that nice little angel group decided it wanted to recruit a few more members. So I received this email, which I think sets the tone perfectly for how effective angel networks can be built. I’ve changed a few words here and there to protect the innocent.
When you have a moment, review your personal network of individual investors in an effort to find new XYZ-PDQ Angels members. It might be nice to increase the size (breadth and depth) of our group as we head towards our one-year anniversary in January.
Ideally, potential new members have co-invested with the sponsoring member in the recent past. The goal is to limit invitations to people who have demonstrated favorable characteristics as a co-investor. Remember that your recommendation will be vouching for the new member’s behavior. Think about people with whom you and entrepreneurs will feel comfortable “being in the trenches”.
If you have somebody in mind, please post an email to the group or raise the name at the next lunch. Unless there is a desire to make the nomination process more formal, I suggest just posting the name to the group to confirm that there are no objections to the person. I and others can be available for an informational meeting with the nominee, but it is not required. Remember that we are trusting your judgment.
Bingo. Just like with most web sites, less is more. Angel networks are best (in my experience) when left small and informal. No fees to charge, just simple social controls. If you recommend a company or a group member, you’re putting your reputation on the line. And that’s exactly how it should be. This is one angel group I’ll continue to keep an eye on and participate with.