Angel Investors FAQ
Chippewa Valley Angel Investors Network, LLC was formed in 2003 to help meet a recognized need in the Chippewa Valley an become a critical part of the overall economic development infrastructure.
What is Angel Investing?
The definition of an angel investor is a high net-worth individual interested in allocating a portion of their individual portfolio by investing equity capital (and perhaps time and experience) in start-up and early stage entrepreneurial ventures. These are high-risk, high-reward opportunities.
How do Angels Operate?
Angel investors operate in a variety of ways. Some operate as individuals, often called guardian angels, some operate in groups as a network, and some operate in groups as a fund.
How are investments made?
After a presentation is made and due diligence performed, a poll is conducted by members to assess interest. If a decision to invest is made, only interested members will invest proportionately in a separate LLC that will subsequently own a share in the company. There is a minimum expected investment per member at that time.
How do I join?
Angel investing can be an unfamiliar type of activity for many people. CVAIN allows potential members to attend meetings to better understand the process without obligation. Once a member decides to join, there are annual dues which allow the investor to attend meetings, hear venture presentation pitches, and make investments.
What is the return on investment?
One major key to angel investing is patience. Early stage and start-up companies take time to grow to high value exits. Historical national averages show 20% annualized returns are achievable in the five to seven year time frame. CVAIN has experienced two positive exits with substantial returns, as well as two negative exits. Due to the nature of how the network operates, CVAIN does not calculate a ROI, because it will be unique to each individual investor.
What is an accredited investor?
SEC regulations define an accredited investor as an individual with a net worth of at least one million dollars (excluding primary residence), or an average income of $200,000 ($300,000 joint) for the past three years.
How does CVAIN operate?
Chippewa Valley Angel Investors Network LLC is a group of approximately 24 individuals from around the Chippewa Valley and western Wisconsin. The network meets once per month (scheduled the second Tuesday of the month) for a 90 minute meeting to review venture investment presentations and update portfolio companies.
Presenting companies have been pre-screened for investment criteria. Once presented, the network may perform additional due diligence before deciding whether to make an investment. Even with a level of screening and due diligence activity, these are very risky venture opportunities.
CVAIN will focus on opportunities in the greater Chippewa Valley and western Wisconsin region. The network will also consider regional opportunities in the Twin Cities and Madison/Milwaukee metropolitan areas. Typically the group does not screen opportunities beyond that geography.
Why join a network?
There are two main advantages to joining a network.
1. In a network, an individual may invest a smaller amount of equity in a larger number of ventures. This basic definition of diversification is an advantage for any investment portfolio.
2. In a network you combine your expertise with a broad base of group expertise. This allows for better opportunity support as well as networking for particular skill sets and other opportunities.
What is my commitment?
Beyond the dues, it is completely up to the individual member to participate in some, all, or even none of the opportunities. Involvement beyond financial is strictly up to the individual member as well.
What is crowdfunding, and does CVAIN participate?
Crowdfunding is a relatively new method of fundraising for start-up companies. With different rules in different states and at the federal level, CVAIN does not participate directly in any crowdfunding or general solicitation opportunity.
Want more information?
Please contact Pete Marsnik for more information.