Wings of Wisdom: Angel Investing in Your Third Act

Dear Friends,

I was recently at dinner with a group of women who are business connections, but we’ve also become friends. We share personal and professional challenges with each other and it’s always something I look forward to. One of the topics that came up was an opportunity for us to join a women’s angel investing group, which one of the women is a part of and clearly enjoying.

This got me thinking about the many benefits of joining a group like this, and I’d like to take this week’s newsletter to talk to you about angel investing and how it can fulfill many of our third act needs like social relationships, life-long learning, purpose, identity, mentoring, giving back, intellectual stimulation, skill development and obviously potential financial rewards. If you are curious how one activity can check off so many essentials in your next chapter - keep reading! 👀

What is Angel Investing?

Finding Angel Investing Groups

If you're intrigued by the prospect of becoming an angel investor, joining an angel group can be an excellent starting point. Here are some ways to find these groups:

1. Online Platforms: Websites like AngelList, Gust, and Angel Investment Network connect entrepreneurs with potential investors.

2. Local Entrepreneurship Organizations: Become active in local startup communities and entrepreneurship groups like Startup Grind or 1 Million Cups.

3. Industry-Specific Conferences: Attend events relevant to sectors you're interested in, such as TechCrunch Disrupt or Web Summit.

4. Angel Capital Association (ACA) Directory: The ACA maintains a comprehensive directory of angel groups across the United States.

5. Networking: Leverage your professional network to connect with existing angel investors who might introduce you to their groups. This is my favorite way to find opportunities!

Benefits of Angel Investing in Your Third Act

Financial Potential

While angel investing carries high risks, it also offers the potential for significant returns. A well-managed, diversified portfolio of angel investments can lead to returns of 20+% over time. However, it's crucial to remember that this should be a small part of your overall investment strategy—typically around 5-10% of your portfolio.

Social Rewards

Angel investing isn't just about money—it's a social activity that can be incredibly fulfilling in your third act. By joining an angel group, you'll:

• Build Valuable Connections: Network with like-minded individuals who share your passion for innovation and entrepreneurship.

  • Another advantage is that these groups are likely to be made up of different generations, which I recommend staying connected with as we get older!

• Stay Relevant: Angel investing is a way to stay connected to cutting-edge ideas and maintain your relevance in the business world.

• Give Back: Many angel investors find satisfaction in mentoring young entrepreneurs and contributing to economic growth in their communities.

Lifelong Learning

Engaging in angel investing provides an unparalleled opportunity for continuous learning:

• Exposure to New Ideas: You'll constantly encounter innovative technologies, business models, and industry trends.

• Skill Development: Angel investing hones your decision-making, risk assessment, and strategic thinking skills.

• Intellectual Stimulation: Evaluating startups and participating in due diligence processes keeps your mind sharp and engaged.

Structure and Membership

Angel groups can be structured in various ways:

• As a non-profit entity where individual angels invest independently

• As a limited liability corporation, where members own a portion of the legal entity

• As a hybrid model allowing members to opt in or out of specific deals

Membership often requires annual fees ranging from $100 to $2000 to cover administrative costs.

Investment Process

1. Deal Sourcing: Groups receive business plans and executive summaries from entrepreneurs seeking funding.

2. Screening: Administrative staff or members review submissions to select promising opportunities.

3. Presentations: Selected entrepreneurs pitch their ideas to the group, usually in 10-45 minute sessions.

4. Evaluation: After the presentation, members discuss the opportunity privately.

5. Due Diligence: If there's interest, members collaborate on thorough due diligence.

6. Investment Decision: Based on the group's structure, investments are made either by individual members or collectively as a group.

Investment Details

• Typical individual investments range from $25,000 to $100,000, with group investments up to $500,000. (💡 there are also a lot of groups where the investments are much smaller)

• Most groups apply standard terms to their investments, with some flexibility for negotiation.

• The average holding period for investments is about eight years.

Benefits of Angel Groups

1. Access to better deal flow

2. Shared due diligence efforts

3. Diversification of investments

4. Ability to make larger, more impactful investments

5. Networking and learning opportunities for members

Meeting Frequency

Angel groups typically meet monthly or quarterly to review potential investments, conduct due diligence, and make investment decisions. By working together, angel investors can leverage their collective expertise, reduce individual risk, and potentially increase their chances of successful investments in promising startups.

I was recently interviewed on the Why Should I Refer You? podcast with host and referral marketing guru, Mike Garrison. This was a fun interview where I talk about my business and how I choose referral partners. Have a listen 🎧!

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Stay tuned for weekly content about travel, health, relationships, identity, spirituality, doing good and starting a new venture as it relates to your third act/the next chapter in your life ✨

Please subscribe and forward this newsletter to others who are thinking about planning their third act. Thanks for your support 🙏.

Warm regards,

Cara Gray
Third Act Consultant, CPRC, CEPA™️

P.S. If you want to start planning your third act, set up a time on my calendar for a chat: Schedule a Chat with Cara

P.S.S. If you are curious about my consulting work, there are two options to work with me: deep-dive, transformative 1:1 consulting or a 90-minute intensive, quickstart session. Details about both options can be found here.