Wednesday, December 9, 2009
Insights and Opinions: The New Angel Paradigm
There's been a lot of controversy and debate in recent months over how angel investment groups ought to be structured, if they ought to charge entrepreneurs, and other similar issues about the role of organized groups and companies in the investment process. For today's Insights and Opinions piece, we have an article from John Dilts, founder of the Maverick Angels and one of the co-founders of The BioTech Forum, the effort to jump start biotech startup activity in Ventura County. John lays out his argument on why groups like his are vital to helping shape the way angels and entrepreneurs interact.
For the past 20 years, I have had a front row seat in watching the evolution of the angel and venture capital sector from both the legal and venture finance perspectives. I have witnessed how the early stage investment space has morphed rapidly, and I have watched the ebbs and flows and the ultimate collapse of the former venture capital model as the global economy turned on its head.
Incubators, venture accelerators and numerous other early-stage focused models have come and gone, but the angel network model is now consistently growing in popularity and interest. There are specific drivers behind that trend: 1) Interest by angels in sharing risk and due diligence; 2) Managing an increasing volume and variety of opportunities efficiently; 3) Leveraging the collaborative strengths of the membership; 4) Giving individual members the power to make their own investment decisions via a hands-on approach (especially important when managed stock portfolios took a nose dive) and 5) The need to socialize and interact with like-minded, like-spirited investors with a passion for supporting entrepreneurial ventures (many are successful serial entrepreneurs themselves).
Given these drivers, there is an enormous opportunity to organize the way angels and entrepreneurs interact in the early stage in a win-win manner. (Continued...)
Read John's entire editorial on his new angel model in our Insights section.