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Pools of Angels Make the Money Hunt Easier
About two years ago, Jack Wheeler set out to raise money to hire a staff for MicroPhage, in Longmont, Colo., his start-up company that provides technology for detecting bacteria. He knew it was too early in the game to attract venture capital, so he began sounding out that amorphous network of private investors known as angels.
Angels are wealthy individuals who typically sink around $50,000, into promising new companies in the hope of lush returns down the road. They are often the best hope for struggling start-ups that are high on promise and low on cash. The problem for entrepreneurs is that to get the money they need, they often have to negotiate a confusing array of 5, 10 or even more separate deals.
Mr. Wheeler benefited from a slowly building trend that got a push from the dot-com bust: the emergence of angel groups whose members pool their resources and often assign a manager to help with their bargaining or administrative chores.
The $2.5 million he collected in two rounds of financing came from 22 investors, but because most of them belonged to one of two angel organizations, he negotiated with their representatives rather than dealing with them one by one.
While most of the nation’s estimated 225,000 active angels continue to operate independently, those who join such collaborative arrangements represent an increasingly influential minority. Jeffrey E. Sohl, who directs the Center for Venture Research at the University of New Hampshire in Durham, says the number of active groups has increased from about a dozen a decade ago, when the formation of the Band of Angels in Silicon Valley made headlines, to about 135 today.
By ANNE FIELD
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