Angels Aligning in Own Association

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.

The new Angel Capital Alliance, sponsored by the Ewing Marion Kauffman Foundation, already has been endorsed by 46 angel capital organizations throughout the U.S. and Canada, with many other angel groups interested in membership. Approximately 170 angel capital groups have been identified across the continent.

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," said Marianne Hudson, manager of the angel investing initiative at the Kauffman Foundation. "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."

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 Alliance will be based at the Ewing Marion Kauffman Foundation headquarters in Kansas City, and it should begin operations by the end of the year. More information is available at http://www.kauffman.org.