From the Introduction:
From 1996 to 2003, the number of angel organizations in the United States increased significantly from an estimated 10 to about 200 groups. This growth occurred because individual angel investors found many advantages to working together — better investment decisions, enhanced deal flow, the ability to combine their funds into larger equity investments, and group social attributes. Nearly all of these groups created their structure de novo having little or no guidance or best practices to follow. To meet the need for information, this Guidebook has been developed to help in the establishment of angel groups most appropriate for prospective member investors and related community. It is designed to provide practical suggestions, tools, and best practices in starting and operating an angel group.
Starting any type of group can be a daunting task. Establishing a successful angel group can be particularly difficult because angel groups are a recent phenomenon, and angel investors are notoriously private. To make matters more confusing, many different organizational models or structures have been successful. In addition, success is not necessarily measured by return on investment, since angels typically invest at an early stage, and returns may not be seen for several years. Instead, success may be measured by factors such as member retention, investment rate, accomplishment of goals, and member satisfaction.
Despite a seeming morass of variables and choices, there are basic factors, decision points, and questions that should help you determine the type of structure that best suits you, your member base, and community. This Guidebook is intended to take you through a decision-making process to determine the best structure for you, provide examples of organizational structures and functions, and give you a head start in establishing your angel group with some critical documents and guidelines.
One size does not fit all, however. So, after you have gone through the discussions, questions, and options outlined in this Guidebook and come to a conclusion for a particular step or factor, you may decide to choose a different model just because your membership has a greater comfort level with more or less structure at this point in your organizational development. Recognition and acceptance of the need for growth are important, and willingness to adjust your model, goals, and orientation will be important for your organization’s long-term success.
You should be sure to consult qualified counsel regarding federal, state, and local rules and regulations that may govern your organization. Attorneys and accountants can be invaluable to any organization, and you should avail yourself of their knowledge and background to ensure the legality and economic value of your angel group.