First Network for Angel Investing Groups Formed; Kauffman Foundation Gives Voice to Angel Organizations

In 2002, angels invested $15.7 billion in entrepreneurial businesses in the U.S., according to the Center for Venture Research. Yet – until now – there was no organization to establish best practices or collect data on how to maximize the performance of groups of angel investors.

By:
Press Release
Kauffman Foundation
Kansas City, MO

The new Angel Capital Alliance, sponsored by the Kauffman Foundation of Kansas City, has been endorsed by 46 angel capital organizations throughout the U.S. and Canada with many other angel groups interested in membership.

"Access to capital is a big hurdle for entrepreneurs, and we’re trying to lower it," said Carl Schramm, president and CEO of the Kauffman Foundation. "While the flow of formal venture capital is important to our economy, only a very small percentage of entrepreneurs receive VC funding. We intend for this alliance to help entrepreneurs and investors alike by increasing awareness and availability of angel funding and establishing enhanced standards for investment practices."

Approximately one in 10 start-up or early-stage companies in the U.S. receive equity capital from angel investors. Angel investors, on an individual basis or through groups, may invest up to 90 percent of the independent equity that early-stage businesses receive. Angel organizations are important because they help individual investors combine their funds with other angels, lead to better investing practices as members learn from one another, and make investors more accessible to entrepreneurs as groups publicize their existence in their communities.

"The Angel Capital Alliance builds on a trend in equity investment, in which more and more individual angel investors are working together. The number of angel groups in the U.S. has tripled since 1999, but they have not had a platform in which to network and learn from each other," said Marianne Hudson, manager of the angel investing initiative at the Kauffman Foundation.

The Angel Capital Alliance will enhance angel group practices, which may lead to increased and better investments in early-stage entrepreneurial companies. As a hub for angel organizations, it will:

— outline and share best practices for angel organizations;

— develop industry benchmarks for success;

— advise members on processes and relationships with entrepreneurs;

— assist in the development of needed data and research on angel investing,

— create and maintain a vibrant Web portal;

— promote regional collaboration among angel groups, encouraging joint investment; and

— encourage individual angel investors to join angel organizations.

The Angel Capital Alliance grew out of a national, organic movement. The association was formed after the Kauffman Foundation sponsored a series of "Angel Organization Summits" in 2002 and 2003, which attracted representatives from more than 80 angel groups.

"Angel investors have supported entrepreneurs for decades," said James Geshwiler, managing director of CommonAngels LLC in Boston. "The economic conditions of the past five years, however, have highlighted that being a good investor and supporter of new companies requires attention, discipline and continuous improvement. Angel groups have been growing as a way to institutionalize these processes – and Angel Capital Alliance takes that a step further, sharing experiences at a national level."

http://www.nasvf.org/web/allpress.nsf/pages/7934