Posted by unregistered user at 2/1/08 11:01 a.m.

average less than 100K? what kind of companies they invested? kiosks at mall?

Posted by unregistered user at 2/1/08 11:14 a.m.

Record year for money IN.

MUCH more signficant for any sort of record (other than the folks who run AofA itself) is how much money did the investors get in return for their AofA previous investmetns!

Posted by unregistered user at 2/2/08 9:48 p.m.

ROI From Past 5 Years = 0

Posted by unregistered user at 2/3/08 8:42 p.m.

Wow....that's a terrible record.

I presume at leat the AofA employees are doing ok, no?

Posted by unregistered user at 2/4/08 8:00 a.m.

A few points about the Alliance of Angels.

1) The organization is a non-profit. This means that the employees don't make a dime off the companies. The goal is to help encourage a robust entrepreneurial climate, which is one of the main tenants of their parent organization, the Technology Alliance.

2) Individual members choose to make their own investments based initially upon 10 minute pitches at luncheons held ten times a year. This isn't a fund in the traditional sense at all, which makes the numbers all the more impressive. As a entrepreneur, you aren't trying to encourage a handful of venture partners to invest in you. Rather, each person in the room is a potential investor with WIDELY differing levels of experience and available capital.

3) On average, Angels have ~$50K to invest in any one deal - though they will often invest much less. Therefore, an "average of $100K" signals that the angels are investing in groups. While this is what you would expect to happen with angel groups, there are typically a high number of lone wolf angel deals in the market.

4) Companies rarely, and should not expect to, fund their rounds completely from one angel group. Therefore, it's important to think of investments as not $100K investments for kiosks, rather they are $100K out of a $650K round or so.

5) I don't have access to the current crop of AoA investments, so I can't comment on the 0 ROI. It may be correct. However, I believe 2003 (5 years ago) was the hardest time in AoA history to find good deals. Deal activity had been on a downward trajectory until 2004 - and it's been strong every year since. There are many good companies funded by the AoA that are still in business, growing strong, and have received additional rounds of funding (some from angels and others the VC route). It'd be more interesting to see how many investments are still active.

I think the current crop of AoA program managers and staff are doing a great job of finding the good investment opportunities and the members are writing checks.

Ed Hansen
Widemile Inc.
AoA program manager, 2004-2006

Posted by unregistered user at 2/4/08 10:08 a.m.

Good explanation...thanks!

How much do folks pay to be members of AofA?

Posted by unregistered user at 2/4/08 4:17 p.m.

Interestingly, the AofA doesn't seem to list membership dues on its website.

In the article below from 3 years ago, it said the initiation is $1500 and the annual dues are $1000. One would assume that 3 years later it's gone up.

John, it would be an interesting thing to find out what the current dues are -- can you do that -- especially in terms of the announcment they made (that you covered) saying it's a record year and the additional comment saying ROI is zero.

Here's the article: http://www.worth.com/Editorial/Wealth-Management/Investment-Risk-Management/subarticles/Smart-Money-Survivors-The-Wisdom-of-the-Crowds-2.asp

Posted by unregistered user at 2/5/08 10:40 a.m.

Key to making a small fortune in angel investing..start with a large fortune!

Posted by unregistered user at 2/5/08 10:53 a.m.

Or charge investors $1500 and $1000 per year! Get enough (several hundred) and it's a guaranteed income stream!

Posted by unregistered user at 2/5/08 1:50 p.m.

Yup....Barnum said it best! And Aofa has perfected it!

Posted by Rebecca Lovell at 2/5/08 5:29 p.m.

As the program director of Alliance of Angels – a non-profit entity dedicated to serving both entrepreneurs and investors – I would like both to applaud the desire for transparency, and clarify a few points. (1) Our staff is not compensated based on deal flow or member investment; our program managers' salaries are covered by sponsorship and endowment. (2) Our annual membership dues are $1250 for individual accredited investors. (3) We do not charge presentation fees to entrepreneurs (a one-time $95 application fee covers costs associated with online submission and review of a company's business plan and a 90-minute coaching meeting with our staff). Because of the support of our members and sponsors, we're also able to offer numerous events to benefit the greater entrepreneur and investor community, at a lower cost than we could otherwise, or sometimes at no cost whatsoever: workshops for entrepreneurs at a minimal fee, entrepreneur and investor education events open to the public, complimentary moderated discussions for our investor members, and free networking and panelist events for entrepreneur alumni of the AoA program.

In our 10 year history, we've had 18 exits: 4 IPO's and 14 acquisitions, where the return to investors ranged between 2X and 9X. Given a 7-year exit expectation, the bulk of our investments have not yet come to fruition (55% of our deals were done in the last three years).

Posted by unregistered user at 2/5/08 6:55 p.m.

Rebecca,

Awesome explanation. How many total deals have AofA members done since its inception?

Posted by Rebecca Lovell at 2/5/08 9:07 p.m.

The Alliance of Angels has tracked 163 investments in 115 unique companies over the past decade (the difference in the two figures indicating follow-on investment activity). In the program's history, AoA Members have directly invested $35.4 million in companies that were screened and selected by the organization, and through their relationship network, facilitated an additional $34.8M of investment in these companies.

Posted by unregistered user at 3/28/08 11:35 a.m.

I find this article very interesting from the standpoint of someone who has been searching for investment capital for a few years now. The product I have has a market of almost 2 Billion dollars per year. I have already invested 30 years and over a million dollars into it. The proof-of-concept has been tested and I am now ready for the pre-manufacturing prototype which will be used to qualify some changes in the component parts.

The problem I have encountered over these years is that if you are looking for a little money to start a small business, you might get some from these type of organizations. If you are looking for an investor(s) for a product worth billions than the list just got very small. I have only found two in the last year and both said they would do it in a heart beat if they weren't already too old. Both were over 70. It seems that the ability to pursue a large project only comes with age and most of them already have enough money that they don't want to start something that big again. Even with an exit strategy of a year or so, it could still require staying in because the limited competition can't afford to purchase the company. When this happens your choice is to become the dominant company or let someone else take the lead. Once you introduce a product to the market and the market sees the value, copies start to come out if the difference between cost and sale price allows for it.

What some of us need is not to have to pay $95 dollars to every group that says they can provide the investors and instead have these honest groups find a way to let those of us with real prospects get those ideas in front of a review panel. A good review panel could screen out the ones that won't make it and narrow the list very quickly. If all these people who keep giving voice to how they "give back" to the community would really do as they say then a system could be set up that would have real meaning.

There are lots of good money making ideas out there but the process of getting them funded is usually more daunting then the inventor/innovator can handle. Remember, these people put their life savings into a lot of these products and don't have "spare" cash to give to every Tom, Dick and Harry who claim to be able to help them.