I just returned from Miami, Florida where we had our 6th successful Speedpitching Luncheon. While there, I met with a member of NuWorld Angels and had a terrific discussion about how their group works. It is quite interesting to see that a lot of groups are moving from the traditional angel “network” to a more non-traditional “committed capital” model.
Angel Network: a group of angel investors that meet together regularly to formalize their investments in start-up companies. These networks often pool resources and expertise to make wise investment decisions. The key characteristic is that each angel member may decide whether or not to put money into any given deal.
Committed Capital: very similar group features in that the members meet regularly and pool resources. The difference is that the members must committ a certain amount of money to a fund each year. Then, when the group decides to make an investment, it comes out of the fund that has already been collected.
One of the difficult aspects of an angel network is collecting the checks from all of the investors that commit to invest during a meeting; they may have to get permission from their spouse, accountant, attorney, etc. and when it comes down to writing the check, something else has taken precedence. With the committed capital, you will definitely not have that problem.
