Entrepreneurs who want to raise angel funding can approach three types of potential investors: individuals, angel networks, and angel funds.
Individual angels are wealthy people looking to invest in private companies on their own. Angel networks are affiliated groups of individual investors who meet regularly to consider potential deals, but invest individually rather than as a group. Angel funds are groups of investors who pool money to invest together, usually alongside extra investments from individual members.
There’s some indication that the last type is on the rise. Of the last 14 angel groups that joined the Angel Capital Association, half of them have organized funds, according to John Huston, the group’s chairman, who visited BW in New York this week. On average, only 20% of the ACA’s existing member groups have angel funds, he says.