move the needle
W
e talk a lot here at the Angel Capital Group about moving the needle, by which we mean doing something every day that makes a difference. Over the last five years, we’ve managed to bring together a group of incredibly passionate people who set out to move the needle through business and investment. Every day. I want to tell you our story. I founded the Angel Capital Group in January of 2007. Up to that point, I had been occupationally split between both of the worlds we serve now: I was both an investor and an entrepreneur. By 2007, I had started three small companies, but my “day job” was as a stockbroker. I loved designing portfolio strategies, and it was through the pursuit of the optimal diversification model that I entered private equity. I had heard, from the traditional stockbroker’s perspective, that private equity was the wild west of finance—cowboys and all. But it seemed clear to me that private equity was the best way to diversify my clients’ public portfolios because the private markets reacted opposite to the public markets in most ways (hence diversification). Then there were the potential returns: private equity made the public market look like amateur hour. Which begged the question, How do I get my clients into private equity? The options were not encouraging:
Option 1: Venture Capital funds.
Most of the funds with good track records had minimum investments of $1,000,000, focused on one industry segment and hoped to be able to return your money in 10 years or so (maybe). But most of my clients didn’t have the net worth to put that kind of money into one fund and one industry wasn’t diversified enough for me to feel comfortable recommending the investment to a client. And who would want to tie up their money for that long? I began to see what people were talking about when they said (and say) Venture Capital is “broken.” Option 2: Invest as an individual.
I hadn’t heard much about Angel investors, and it’s tough to find these loners out on the range. I did find good information about Angel groups through the Angel Capital Association. Back then, most Angel groups seemed to operate as not-forprofit funded by local economic development entities that charged small membership fees (usually about $1,000) and were focused mainly on funding local companies for job creation. Entrepreneurs would present to these groups or deals would be shopped to the members with expertise in that particular area. I was left with a lot of questions and felt this model fell short in a couple of ways. For example:
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a n g e l c a p i ta l g r o u p
»» How was I supposed to build a diversified portfolio if I only looked at deals in a specific area? »» How many deals would we do in a year? »» How was I supposed to know if it was a good deal? »» How are these investments made? »» What if I want to invest outside my area of expertise? »» How much money were they expecting me to invest? »» How would I manage all the accounting and legal work of doing this type of investing? I set out to create a service company that would provide the answers. Our response to investors looking at Angel investing was: »» Do as many deals as you can – at least 20 in as many different industries as possible. Diversify, diversify, diversify. »» Leverage the knowledge and experience of the investors around you by being part of a group. At the end of the day, any investment we make is a “good deal” because we, personally, believe in it. No one can pick winners every time, so we spread our bets and use our network members to make those bets educated across many industries. »» ACG handles all the deal structuring so you don’t have to compete with other members on deal terms or incur the legal fees of structuring the investments. »» We operate under a fair play model. All members review the same deals, and every member gets to participate in any deal they want. »» No one is expected to invest any minimum amount of money. In fact, we don’t charge anything until you find a company you want to invest in. There are no individual minimums, so you can build the portfolio you want. »» Post-funding portfolio maintenance is our service commitment to you. Oh, and we would be very much for-profit. Let’s be honest: not-for-profit isn’t exactly my language, and I wanted to make sure our team was 100% committed to our investors making money because that meant we made money. We call that a win-win. At the end of the day, we all have a lot of choices about how we invest our time and money, and I want each of our members to know how grateful we are you have chosen to invest with us over the years. We think of ourselves as the catalysts, but it’s you who truly move the needle. So here’s to funding the future. We think it's looking bright. Kind Regards, Rachael Qualls F o u n d e r & CEO