The Funding Gap between typical angel rounds ($250-$750K) and average venture round of $7-8 million is really difficult to bridge. Over the past five years, angel group leaders have found that syndicating deals with neighboring angel groups and other early stage investors has several distinct advantages:
- More investors can be made aware of interesting deal to close larger rounds
- Better expertise can be identified within several groups for scrubbing deals, to support portfolio companies after investment and to network with potential partners, customers and acquirers.
- A larger pool of investors is aware of the deal and available to fund subsequent rounds of investment.
Formal syndication groups have been organized in the Northeast, Ohio, the Pacific Northwest and elsewhere. Regional syndication has become routine among many angel groups in the US, with a majority of all deals receiving funding from multiple groups.
Angel investors also seek colleagues with similar interests to join in funding deals in specific business segments, such as life science, medical devices, software and clean technologies. Paul Silva (Angel Catalyst) and Michael Gruber (Cornerstone Angels) have a pilot syndication group for angels interested in CleanTech deals. Already a dozen angel groups are meeting on a regular basis, building trust, helping one another, and exploring deals together. Their next major effort is to meet in person at the Angel Capital Association Summit in Austin, March 6-8, 2012. In addition to meeting and getting to know one another, the group plans to view a few CleanTech presentations “wrapped up and ready to go,” and nominated by fellow ACA members who are already backing the presenter. ACA members may nominate CleanTech deals through this Friday, February 10. Details are available on the ACA Web site (link to: http://www.angelcapitalassociation.org/events/2012summit/cleantech/).
The annual ACA Summit is a great gathering place for angel investors interested in best practices and meeting like-minded investors. Paul and Mike are making it easy to connect with those interested in CleanTech deals. For more information, feel free to contact Sarah Dickey at the Angel Capital Association.
All opinions expressed are those of the author, and do not necessarily represent those of Gust.