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Angel Investment Clubs Offer a Ray of Hope -- and Capital

March 9, 2013

If raising capital is on your list of New Year's resolutions, angel investment clubs may help you connect your company to startup and growth capital networks. Angel investment clubs join together individuals with high net worth who have an appetite for investing in promising companies. Many clubs don't allow their members to be passive participants -- they have to invest in order to hear presentations about emerging ideas from passionate entrepreneurs.

It's OK if an angel investment club isn't located in your hometown, because most angel investors will consider promising investment opportunities within approximately 300 miles -- or no more than a day's car drive.

So, if you're gearing up to pitch to investors, here are some key trends in angel clubs to pay attention to in 2013:

Erica Duignan Minnihan, executive director of New York City-based STAR Angel Network, says, "The mood is optimistic. We hope to fund more deals this year and help our existing portfolio companies accelerate growth."

This sentiment was echoed by Kip McCoy of Central Illinois Angels. "Our overall pipeline is trending in a positive direction in both the quantity and quality of deals. We would probably make four to five investments this year in the $750,000 to $1 million range," says McCoy.

Entrepreneurs can pitch single-sector clubs, too. Entrepreneurs who are building aviation or aerospace businesses can solicit the Space Angels Network in Leesburg, Virginia; clean tech entrepreneurs can pitch Clean Energy Venture Group in Boston; health industry entrepreneurs can pitch Health Care Angel Group in Houston or WINGS of Seattle. The Sustainable Local Food Investment Group funds innovative for-profit companies that can help create a sustainable food supply in the Chicago food chain.

The ripple effect
Angels invest for many reasons beyond making money. Many invest as a form of giving back to the communities that helped them succeed in business.

Since entrepreneurs typically boost hiring after receiving a round of investment capital from angels, I expect that more state public policymakers will collaborate with angels to stimulate new club formation in rural communities and around colleges and universities. That's good news for ambitious entrepreneurs who can benefit from the mentoring wisdom and cash that angels have to offer.