Investing is hard. It’s yet-another topic that isn’t taught in school, and rarely taught by family either. Here in the 21st Century, where a lot of wealth in America is self-made, the newly minted wealthy need help learning how to invest.
For startup investing, the biggest challenges for investors are finding investable companies (a.k.a. dealflow) and doing enough due diligence on those deals. To overcome those issues Angel Groups are organized, with over 1,000 of these in the United States, some with just a half dozen members and no formal organization, some with 200+ members and a paid staff. Nearly all of these are single, local chapters, but I’m a member of one that isn’t, Investors’ Circle, plus I’m an honorary member of the Alaska Angel Network. I’ve been to meetings of nearly a dozen other Angel Groups in Seattle and elsewhere.
They each have their own personalities, but the formats are similar. The group meets 8-12 times annually, usually at lunch, and the meetings are centered on 2-5 companies who present a formal 6-10 minute pitch, followed by some Q&A. The goal is to showcase screened deals to Angels who each invest as individuals. This form moves billions of dollars of capital, but mostly into tech-based companies, mostly aiming to get in front of deals that will later be funded by unicorn-hunting venture funds.
The downside of this format is that the meetings are focused on investing, with little (or no) time devoted to learning about investing. At most groups investors are expected to learn by doing, and specifically by sitting side by side while others make investments and following along in a few of those deals.
There is another way to learn and another way to organize. The best example of different is the Seattle Impact Investing Group (a.k.a. SIIG), a group of 16 impact investors who have been meeting monthly for over five years with a goal of deeply understanding what it means to be an impact investor. I’m a member of this organization too.
This is first and foremost a peer-learning group, whose members are drawn to the meetings to learn from each other through discussions and guest speakers. Rather than pitches from companies, the members share the deals that they’ve personally found interesting. Rather than 2-5 pitches, we hear about 10-20 investment opportunities. Opportunities not only in startups, but also in funds, real estate, and other asset classes. All from our fellow members, without the formalities of formal pitches, with only as much time needed for each as the interest in the room desires.
Those desires go well beyond dealflow. The bulk of the meetings are spent learning about some corner of life as an investor. This has included discussions in due diligence, deal structures, “zombie” investments, and other common Angel topics, but it has also included guest speakers leading discussions on impact bonds, affordable housing, and blended capital as well as guest speakers helping us understand inheritance, wealth education of our children, and family dynamics.
While those last two paragraphs explain what the group does, neither does any justice for why the group continues to enthusiastically meet.
The key is the culture. SIIG exists and continues because its members all feel like we still have things to learn about investing, especially impact investing. We are investing not only into impactful startups, but trying to make all our assets impactful, from cash to public equities, debt, real estate, etc.
Really, the key reason SIIG persists is that its members are lifetime learners, who feel like there is always more to learn in life, and that the best way to learn is to surround ourselves with other who are also learning, as its not just investing that is best learned in groups, but much of the rest of life’s lessons as well.