Broad Street Angels – Frequently Asked Questions by Angel Investors 2016
Broad Street Angels is a member-led investors’ network focusing on high-growth businesses in the Mid-Atlantic Region.
• How did Broad Street Angels (BSA) get started?
BSA was formed in the Spring of 2016 from the efforts of a small group of Union League members who were interested in forming an affinity club of angel investors. These members saw a real gap in the need of startup companies to obtain capital investment and the availability of such capital.
• Is BSA for passive investors only?
By the nature of start up businesses’ need for experienced advice, investors will play roles of varying activity. Early stage companies always need connections and expertise to advance their businesses. BSA invests in startup, early stage businesses as well as later stage companies with significant traction.
• Many angel networks are networking or social clubs for high net worth individuals. Just how is BSA different?
BSA based its organizational structure, and policies and procedures, on very successful angel networks. Successful networks are defined as those networks whose members make significant capital investments in start up and early stage businesses and have done so over a period of years.
• Why is this a good time to join an angel network?
Start-up capital is always scarce. There are more attractive deals today in the growth of the innovation economy. It is a great time to invest in early stage companies in this period of high growth. Smart peers around the table add great value and knowledge to the investment process.
• Does a BSA member have to be a member of the Union League?
Yes. And a BSA member must also be a member of the Union League’s Broad Street Angels Affinity Club. A spouse of a Union League Member may also be a member of BSA.
• How do I become a BSA member?
A prospective BSA member must submit a Membership Application to the BSA membership committee. Upon approval by the committee, the prospective member must agree to sign a Membership Agreement and agree to have their annual BSA dues billed directly to their Union League account.
• What are minimum qualifications to be a BSA member?
Prospective members must meet the SEC’s minimum standard definition for an Accredited Investor. Angel Groups require members to be Accredited Investors, not to limit the membership, but to protect early stage companies who cannot present their companies for funding to the general public as it violates a ”general solicitation” rule and the company would be subject to Security and Exchange Commission sanctions.
• What is an Accredited Investor?
An Accredited Investor is one who meets the criteria in Regulation D of the Securities Act of 1933, as amended. Those criteria are as follows:
1) The investor is a natural person whose individual net worth, or joint net worth with his or her spouse on the date of investment exceeds $1,000,000, excluding any net equity in the investors primary residence. Or
2) Investor is a natural person whose individual income was in excess $200,000, or in excess of $300,000 with his or her spouse, in each of the last two completed calendar years, and reasonably expects to reach the same level of income in the current year.
• What is expected of a BSA member?
All members are asked to participate in the evaluation of potential investments especially if they are interested in the business. However, it is expected that members from time to time may also be asked to provide their expertise in helping the Screening Committee evaluate a business. Members also bring new investments and new members to the group. Also, due to the nature of angel investing, a sense of urgency is expected from each member who volunteers for an assignment/project.
• Are members’ funds pooled for investment purposes?
No, all investments are made by individuals for their own investment account. There is no central fund for investment purposes. Members invest by forming deal teams with and negotiating terms as a group but investing individually. BSA group investments are in the range of $200K to $500K in a company.
• Is there a membership fee?
Yes, currently $500 annually for individual members, which is used to support the activities and operating budget of the Network.
• Is there a minimum annual investment?
BSA members are expected to be active investors; and engaged in the process of deal sourcing and review. While not required to invest annually,at this time, BSA urges members to consider annual investments in one or more companies that present at BSA membership meetings.
• Is there a minimum deal investment?
Yes, generally the minimum member investment in any deal is $10,000; however, the minimum investment may be adjusted by the deal team.
• How often and where does BSA meet?
We meet monthly at the Union League. Our meetings, generally, are the first Thursday of every month, from 4 pm to 7 pm. Our meeting calendar is published a year in advance to aid members in their planning.
• Are the dues per person or does it include spouse or child?
Dues cover the UL member and spouse only.
• Will an LP be created for investments?
No. At this time, we will not be using specially created vehicles for investments by BSA.
• Will BSA engage legal counsel?
No. BSA will use standard documents for transactions; members are invited and urged to obtain individual legal counsel.
• Who is permitted to invest in transactions?
BSA is open to UL members/spouses who are accredited investors. Priority opportunity for investment in any deal will be afforded to the members of the deal review team to encourage members to be active in deal review. BSA members will not be permitted to independently contact companies that have presented; all company communication will follow BSA protocol and processes.
• Is there a minimum number of BSA members needed to invest in any deal?
No; the opportunity to invest in any deal will depend on the amount of capital that can be raised for the round.
• What is the strategy for attracting opportunities?
BSA is a member of both angel and venture organizations; its founding members are active in angel investing in the region and UL members have wide and diverse networks and relationships that will be feeders for deal flow. BSA expects to partner with others in the region to source and assess opportunities.
• How wil BSA leverage the UL membership?
UL members are highly accomplished and can bring important knowledge and experience. We invite BSA members to be active in the deal sourcing, evaluation and program offerings that BSA will develop as it operates. That said, funds from BSA rounds may not be used to compensated third parties for referring the transaction.