# The Maryland Entrepreneur's Guide/Active Angel Groups

The following are sources for early stage companies to consider:

## Active Angel Groups
### General

An active angel group consists of high net-worth individuals who join together to invest collectively in entrepreneurial firms. The active angel group meets regularly (often monthly) to review business proposals. Often entrepreneurs are asked to make presentations to the membership of the group. If the active angel group decides to make an investment in a start-up business, the angels work together to conduct "due diligence" to validate the business plan, statements and history of the entrepreneurial team.
The members of active angel groups tend to be former entrepreneurs themselves and are attempting to make a return on their investment, but often are also trying to “give back” to their communities by spurring economic growth, which leads active angel groups to want to invest locally as opposed to nationally.
Some active angel groups are more likely to invest in firms that are recommended by people they trust; therefore, it is important for entrepreneurs to network in the local community to gain a referral. Examples of people to contact include: entrepreneurs who are backed by angels, attorneys who specialize in equity investments in start-up businesses, accountants and business counselors.

### Process

Active angel groups conduct several stages of review before making funding decisions. While no two groups of active angels are alike, below is a general list of stages of review:
* Application/Business Plan
** Angel group websites will contain information regarding the process to complete their application, which often requires submission the entrepreneur’s business plan.
* Pre-Screening
** Once an application has been completed or a business plan has been submitted, the angel group will review it to determine if the potential investment opportunity meets the angel group’s general requirements and investment preferences.
* Screening
** If an application is accepted for further review, the entrepreneur will often be asked to meet with a subset of the active angel group to allow the group to further understand the nature of the potential investment, receive more information regarding the business plan, and answer the angels' questions.
* Investment Meeting
** If the angels in attendance at the Screening stage show interest in the entrepreneur's business, the entrepreneur will be invited to present in front of a meeting the entire active angel group. The presentation will be followed by a question and answer session. These types of investment meetings are usually held on a monthly basis.
* Due Diligence
** If the entire angel group shows interest in the business, a period of due diligence will begin. This due diligence will be conducted by those angels and specialists with knowledge of the specific industry under consideration. The due diligence will be a thorough review of the entrepreneur’s business plan and business including the management team, marketing opportunities, a site visit, customer calls, and financially analysis. This process can take anywhere from a few weeks to a few months.
* Term Sheet
** If the angel group decides to invest in the entrepreneur, a term sheet for the investment will be negotiated. This term sheet will guide the lawyers in preparing investment agreements and will determine the relationship between the angel group and the entrepreneur.

### Examples

* Angel Capital Association: Association of angel groups that provides information and education for entrepreneurs on angel investing.
* New Vantage Group: Angel group focusing on Mid-Atlantic region.
* Kaufmann Foundation: Provides advocacy and education for entrepreneurs.