Passive vs Active Angel Investing
John Tozzi has a post on Business Week’s Small Biz blog regarding the trend of an increase in angel funds. I think one reason for this trend is a result of some Angel Investors who are excited by the idea of investing in startups, but are not able to dedicate the time to be an active Angel Investor.
Angel investment networks had a larger growth period a few years ago, whereas previously, individuals dominated angel funding and invested on their own (or with a small number of other people). It may be possible that many of these Angel Investors were more interested in the investing part than they were interested in other aspects of angel investing such as being “smart money” where the Angel Investors provide a large amount of advice and guidance. In addition, many angels would prefer to let others do the screening, due diligence, negotiations, and other work associated with getting a deal done.
Read the original article here.