By Allan Maurer
Entrepreneurs, listen up: if you’re stuck in that early-stage funding gap and need more than seed money expand, you may want to save some room on your venture dance card for angel investor groups.
Matt Dunbar, managing director of the Greenville, SC-based Upstate Carolina Angel Network and a new board member on the national Angel Capital Association, (ACA) says the trend of geographically dispersed angel groups forming syndicates to do larger deals – often out of their backyards – is emerging and likely to “pick up steam.”
Dunbar is on the ACA’s Collaboration Committee, sees “healthy syndication within regions in Texas and the Northeast and restarting in the Southeast, but also on broader terms.”
While we’ve heard about this trend at TechMedia events such as the Southeast Venture Conference and digital summits – always a good place to tap into the leading edge of technology and venture funding trends – we saw a specific example of it this week as the Atlanta Technology Angels joined a syndicate of other angel groups to fund Austin-based Wisegate.
We talked to ATA member Jamie Lewis about the larger scope that deal portends.
Another deal expected to close in July, for instance, has investors from the Carolinas, Pennsylvania, California and possibly Boston, among other regions, he says. “Groups all over the country are in the final stages of due diligence” on the deal, he notes.
Idea makes sense
“This idea of pulling capital together around a larger geography is an approach that makes sense and is needed,” Dunbar says. It is not without challenges, he adds. Processes for crafting the larger deals are “evolving and maturing,” he says, because every angel investor group has “its own culture and norms.” But, he adds, “The more we do this, the better the processes will be.”
Dunbar says that while many angel groups and angel investors are biased toward local deals and want to support those in their backyard, “They also want the best deals they can find.”
Michael Cain, who heads the Wilimington, North Carolina angel investor network, says, “I tell my people we are not economic developers. That idea of the two-hour drive doesn’t work in Wilmington and many other places, so you have to network your deals.”
Over the last three years, the Wilmington Investor Network has done deals in Boston, DC and Raleigh, he notes. Cain, who is chair of the Angel Resource Institute, a research and education organization, says the ARI is going to start tracking syndication deals. In cooperation with Silicon Valley Bank, it does the quarterly Halo report that tracks angel investing activity nationally and by region.
Dunbar points out that technology itself is playing a role, since it makes it easier for entrepreneurs anywhere to find angel lists and groups and for angels to find deals.
“The idea of pulling capital together around a dispersed geography is in the air and emerging in the marketplace, and will only continue,” he says, and even increased if crowdfunding legislation ever gets written.
- Angel groups going beyond backyard investing for better deals
- Angel investment sizes trending upward, Halo report says (infographic)
- NC’s Troy Knauss joins Angel Capital Association board
- Angel groups finding later stage deals, forming syndicates
- Angel investors putting more dollars into the Internet and mobile
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