PROVEN STRATEGIC NAVIGATION

Angel investors come in many shapes and sizes. As it is such a high risk activity and takes such indeterminate, but relatively long, periods before realising gains (although losses can be surprisingly quick!) you must decide if angel investing is the game for you. What type of angel you are depends on: - available funds; - available time; and, - contribution you can make. Angels seem to be split into those that want to work within a group structure, those that form their own syndicate for each investment and those that work alone. It is interesting that in Scotland where groups are prevalent, 28% of the UK angel investment activity takes place, despite only 8% of the UK economy. There the group members all put in relatively small amounts each to make their investment, with one member of the group taking a Board position on behalf of the group. This is becoming the increasingly common model in Australia. This means that the bulk of the investors are passive, relying on their single representative to keep them informed. I favour the smaller syndicate formed of like minded investors who share due diligence, invest larger individual amounts and, perhaps, take a couple of positions on the Board as they bring different, but relevant skills to the business. This, I consider, the more activist angel investor model, using the angel group as a network for opportunities. Those that work alone are taking on more risk, more investment and generally more work. These are entrepreneurial investors. They generally want control of an investment until it reaches a certain milestone before more investors are required. So decide if you want to be a Group Angel, an Activist Angel or an Entrepreneur Angel. The group and syndicate approaches allow you to share the risk and, ultimately, participate in more deals, building a portfolio of investments. They can also allow you an easier entry in to the world of angel investing where sourcing deals is a time consuming issue. They may also allow you to conserve more resource, both time and funds, for that business in which you wish to become the entrepreneur. March 2011