Angel group mid-life crisis

My angel group, RVI, has reached a point that nearly all groups hit if they live long enough… midlife crisis :). Like all groups a small number of our members do most of the deal leading. Over time your veteran members get invested in a lot of deals, tying up their money and bandwidth.  If you don’t add new members who are passionate about investing, you lose momentum.  We don’t want to lose momentum, and thus my research.

I am speaking with leaders who’s angel groups have successfully transitioned through this phase. So far, my major take-aways are:

  • We need a clear brand promise to our members and to entrepreneurs: great deals, efficient process, network that fuels portfolio company success.
  • Training up new members to replace tapped-out bandwidth is critical.
  • Need well established processes to help new members go up the learning curve.
  • Members need to be serious about investing and about improving their ability to do so. If a potential member isn’t willing to make such commitments, adding them can be a detriment to the group.

If anyone else has data they would like to share, I am all ears!

UPDATE 7/12/2011: I’ve interviewed nearly a dozen angel group leaders and compiled there advice in this follow-up post.

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4 thoughts on “Angel group mid-life crisis

  1. I think angel groups could do well to re-think their incentives, and that this could help solve such problems. For instance, the best incentive I have seen for angels to become actively involved in new deals is the “partial fee rebate” solution. Mass Medical Angels has annual dues, but some large percentage of that can be rebated for credit on the next year’s dues provided some hurdle rate (like 25k invested, or some minimum number of investments, I forget exactly) is passed. Similarly, just as you mentioned the $5 gift certificate idea to update info on portfolio companies, there should be some strong incentive for people to bring in new blood. I think some rebating of future membership dues for successful recruitment of new angels is entirely appropriate, as would be the requirement not only to attend some number of meetings, but also to bring in accredited investors as guests.

    Most investors get tapped out or need to take a break, but any good angel investor is constantly networking and recruiting–even bringing in non-presenting entrepreneurs for a look and a free lunch helps the angel group and the overall ecosystem.

    • Ty, thanks, and I am struggling with some of these very questions. My research with my own angels and more generally (Dan Pink’s DRIVE comes to mind) shows me a lot of push-back on reimbursing people’s dues based on performance. I think MOST of our ideas should focus on non-financial incentives.

      Some ideas I am playing with:
      * Recruit new members and get reduced dues.
      * Start each section of our meetings with a relevant “scoreboard” – When looking at new deals show which members have brought in the most deals. When looking at deals in preliminary due diligence, show a ranking of which members have looked at the most deals. When discussing recruitment, show who has recruited the most people.
      * We’re experimenting with quarterly evening events to help close deals that are “wrapped up and ready to go.” I think we could allocate a small portion of these events as a kind of awards ceremony to recognize people who have led our deals. Maybe offer bottles of wine or other simple, inexpensive, yet make-you-feel-good rewards for those who are making things MOVE.
      * A “Mench” award or title given to angels who accomplish the key things needed to make angel groups succeed.

  2. Pingback: Angel group mid-life crisis: remedies « Paul G. Silva

  3. Pingback: Angel group leadership best practices « Paul G. Silva

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