Here you can view frequently asked questions concerning Active Angel Investors. Please choose a section below.

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» General and Operations

Why was AAI formed?
How will AAI work?
Where and how long will meetings run?
Who will join AAI?
Is there precedence for this type of investment group?
How does AAI differ from these other groups?

Q: Why was AAI formed?

A: AAI was formed to address the lack of seed-stage group investment opportunities in the Mid-Atlantic region. John May, Managing Director of New Vantage Group, has created AAI to facilitate these seed-stage group investments. AAI will introduce accredited Mid-Atlantic area investors to pre-institutional, local emerging growth opportunities and provide a group forum for investments in these opportunities. John May and New Vantage Group have successfully formed and managed three angel investment clubs that aggregate individuals to co-invest with venture capital firms in early-stage, institutional rounds of financing.


Q: How will AAI work?

A: AAI members will gather for monthly breakfasts and presentations by seed-stage companies to evaluate them for possible investment by the group. AAI members will decide individually to invest in a presenting company with a group of other members. New Vantage Group will facilitate and manage the investment. AAI is an active investor model.


Q: Where and how long will meetings run?

A: Monthly breakfast meetings are held in the Washington, D.C. metro area, with networking followed by a meal (paid by sponsors) and followed by a program. The meetings will generally run from 7:30 to 10:00am.


Q: Who will join AAI?

A: AAI was formed for active, accredited investors in the Mid-Atlantic region. Individuals comfortable making "five figure" investments, and who expect to make $50,000-$100,000 in private equity investments annually are ideally suited for AAI membership.


Q: Is there precedence for this type of investment group?

A: There have been several networks of angel investors in the United States formed over the past few years. These networks serve primarily to introduce prospective investors to a variety of companies seeking investment. However, after the presentations are made, individual investors are on their own.


Q: How does AAI differ from these other groups?

A: AAI differs in two key ways: First, the AAI structure allows individual investors the freedom to review and identify their early-stage opportunities of interest and then provides that investor a forum in which to make a group, rather than individual, investment. Second, AAI removes the hassle from the seed-stage grouped angel investment process by providing professional staff to screen companies and to assist with due diligence, deal negotiation, creation of investment partnerships, and portfolio management.

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» Membership

How many members are in AAI?
How much are members required to invest?
What are AAI member responsibilities?
May I bring an assistant or send an associate to a AAI meeting in my place?
What if I have a friend who might be interested in AAI membership?

Q: How many members are in AAI?

A: AAI is still accepting members. AAI may close before reaching its maximum of 99 members.


Q: How much are members required to invest?

A: There is no minimum investment requirement. AAI members pay a one-time initiation fee and annual dues. With regards to individual investments, AAI management is seeking members comfortable with making "five figure" investments and who expect to make $50,000-$100,000 in private equity investments annually in AAI companies.


Q: What are AAI member responsibilities?

A: Individual members are requested to be active participants in AAI. This participation includes attending meetings, asking good questions of presenting entrepreneurs, indicating serious interest in deals, and participating in due diligence on potential investments. In addition, all members are encouraged to submit deals with which they are familiar.


Q: May I bring an assistant or send an associate to a AAI meeting in my place?

A: No. AAI is for members only. Members may indicate interest in a company by proxy when not present in person.


Q: What if I have a friend who might be interested in AAI membership?

A: Suggestions about strong candidates are welcome. If a friend of a member would like to attend a meeting, the member may pay a one meeting only guest fee of $75.00. The guest will not be able to invest in a presenting company unless they become a dues-paying member of AAI. The guest is free to join AAI and attend future meetings assuming space is available in the membership and has accredited investor status.

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» Management

Who is the managing member of AAI?
What has been the track record of the Managers of AAI?
How is the manager compensated?
Does AAI have a relationship to the Washington Area Dinner Clubs?

Q: Who is the managing member of AAI?

A: AAI is managed by New Vantage Group. John May, managing partner of NVG, will employ trained associates and other experienced personnel to administer the network's activities. The administration of the network will be by the same management company, New Vantage Group, which runs the Dinner Club, the eMedia Club and the Washington Dinner Club.


Q: What has been the track record of the Managers of AAI?

A: New Vantage Group is the manager of Washington-area angel venture funds, the Dinner Club, the eMedia Club, and the Washington Dinner Club. Investments have been made by these Clubs since Spring '99. Of 20 portfolio companies, one has ceased operations, one is in liquidation (and has distributed a partial return of capital), one sold recently for 2X capital after a 13 month period of investment and several have had subsequent rounds of finance at higher valuations.


Q: How is the manager compensated?

A: The managers are compensated in the following ways: First, AAI management start-up costs are reimbursed by a $2,500 one-time initiation fee from each new member. Second, on-going organizational and administrative expenses are reimbursed by $2,500 annual membership dues per member. Third, when, and if AAI investment partnerships are formed, the managers are paid an annual fee of 2% of committed capital. The first five years of management fees will be paid at closing (for a total of 10%). In the event of a liquidation event in fewer than 5 years, unearned fees will be returned to investors. For investments lasting beyond 5 years, 2% annual fees will accrue against future distributions. Last, the managers receive a 20% profit participation in AAI investment partnerships.


Q: Does AAI have a relationship to the Washington Area Dinner Clubs?

A: AAI will be managed by New Vantage Group, the management firm for the Dinner Club, the eMedia Club and the Washington Dinner Club. John May is the Managing Partner of New Vantage Group and co-founder of the Dinner Clubs with Cal Simmons. As the Managing Partner of New Vantage, John will be actively involved in administrating AAI and will continue to administer the Dinner Clubs. However, no relationship between the Dinner Clubs and AAI exists. Companies presenting before AAI will be pre-institutional and therefore are earlier stage than those that typically present to a Dinner Club. Additionally, Dinner Clubs generally co-invest alongside traditional venture capital firms, while AAI investments will usually be stand-alone.

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» Investments

How will decisions be made on which companies receive an investment?
What stage will the transactions be?
How large will each of the transactions be? How many investments are anticipated?
Will AAI be a lead investor?
Will AAI invest in a deal independently?
What is the structure of each AAI investment and co-investment?
What if total AAI group interest in a presenting company is less than $250,000, but an AAI member still wants to invest in the company individually? Will he or she be able to do so?
Will AAI members have access to the companies reviewed at NVG's weekly meeting but NOT selected for presentation to AAI?
How do I receive more information on this or other groups?

Q: How will decisions be made on which companies receive an investment?

A: After a company presentation and a period for questions, individual members will be asked for a non-binding expression of interest in investment. When AAI members indicate interest in investment greater than $250,000 (in aggregate) in an individual company, New Vantage Group will organize those self-selected members into a due diligence committee. The due diligence committee will meet within one week of the initial company presentation. Upon conclusion of due diligence, should a subset of AAI members decide to invest greater than $250,000 (in aggregate) in an individual company, New Vantage Group will organize an investment partnership and act as its manager. New Vantage Group will receive normal and ordinary fees as manager, and will participate in the carried interest upon any distributions from the investment.


Q: What stage will the transactions be?

A: Presenting companies will be exclusively pre-institutional and therefore most often in their earliest stage of growth. These companies are expected to provide a large equity-for-investment ratio. Neither previously venture-backed companies nor companies with lead venture investors in their current rounds will be considered.


Q: How large will each of the transactions be? How many investments are anticipated?

A: While the transaction size may vary, AAI investments must exceed a minimum of $250,000 and are expected to fall in the $250,000 to $750,000 range. The network is anticipated to execute 5-10 investments per year.


Q: Will AAI be a lead investor?

A: Because AAI will see exclusively pre-institutional deals, AAI investment partnerships will most often be the lead investor in the round of financing. It is not mandatory that AAI investment partnerships lead.


Q: Will AAI invest in a deal independently?

A: It is possible that a AAI investment partnership will be the sole investor in a deal. Members vote on which deals to invest in.


Q: What is the structure of each AAI investment and co-investment?

A: The structure of the deals will be negotiated on a case-by-case basis, but will mostly be for preferred stock as opposed to other instruments. AAI members making investments may be advised to prepare reserves for follow-on rounds of funding for portfolio companies.


Q: What if total AAI group interest in a presenting company is less than $250,000, but an AAI member still wants to invest in the company individually? Will he or she be able to do so?

A: Yes, the individual may invest in the company, but NVG will not be part of the process. The member will manage all aspects of the process.


Q: Will AAI members have access to the companies reviewed at NVG's weekly meeting but NOT selected for presentation to AAI?

A: Those members that attend the monthly screening sessions may follow-up with companies at the screening session that were not selected to present at the all-member meeting. However, New Vantage Group will not actively promote non-selected companies to the AAI membership.


Q: How do I receive more information on this or other groups?

A: Contact John May at the New Vantage Group's primary office at 703.255.4930.

 

 

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