The Circuit

Queen City Angels works in cooperation with C-CAP, which is an initiative of The Circuit.

Read Entire Business Courier Article by Dan Monk
Committing a ‘larger pool of capital’

Angel investors are high-net worth individuals who purchase shares of stock in startup companies. Typically, they invest alone. But increasingly, angel investors are forming groups to jointly evaluate investments and provide management guidance to the companies in which they invest.

The Angel Capital Association estimates there are 225,000 angel investors in the U.S., including about 15,000 who participate in some 300 groups. Overland Park, Kan.–based ACA has 165 members. On average, the groups had 42 members each, with each group investing $1.8 million in 6.3 companies in 2008.

“We don’t have the large number of members that some groups have,” Shipley said, “but we have people generally committing a larger pool of capital.”

Shipley is trying to grow membership in Queen City Angels to more than 40. But it’s more than just capital he’s seeking. He’d like investors with experience in life sciences and information technology, which account for 80 percent of all investments made by the group. And he’s eager to add women and minorities to a group that is predominantly white and male.

“That means the workload is split among the group and nobody is over worked,” he said. “The normal angel doesn’t want to spend 60 hours a week working deals. They’ve got other things going on in their life.”

The vetting process for new angels is extensive. It includes a verification of each investor’s status as an accredited investor, which means a net worth in excess of $1 million, and an initial interview with Shipley and QCA Executive Director Jim Cunningham. Investors then submit a bio, which is circulated to all existing members for feedback. Then comes a visit to an investor meeting and the new member’s informal pledge to invest at least $250,000 over three years.