Jocelyn Chang: Comparing Angel-Investing Models

In late 2004, a cashed-out entrepreneur in the health sciences decides to pursue private-equity angel investing as a means to fulfill her professional, financial, and personal objectives. Jocelyn Chang investigates three different types of angel organizations: the Band of Angels, Tenex Medical Investors, and the Washington Dinner Club. As part of her research into private-equity investing, she explores recent (postbubble) developments in both angel investing and the venture-capital industry. Excerpt UVA-ENT-0063 Jocelyn Chang: Comparing Angel-Investing Models Jocelyn Chang pulled her new Mercedes out of the parking lot of the Silicon Valley restaurant and headed toward home. She had just attended a meeting of the Band of Angels and had much to contemplate. Tonight's meeting was the third angel investor group she had visited in as many months. Following the acquisition of her medical technology business three months earlier at the end of 2004, Chang had bought a new home, enjoyed a long overdue vacation, and increased her volunteer work. At age 50, Chang considered herself too young to retire but weary of the 70-hour workweeks she had endured during the past 15 years to grow her medical imaging company into a successful enterprise. Now, with $ 12 million in cash proceeds from the sale of her company, she was ready for a different kind of challenge, one that could perhaps lead to an opportunity for a second career. Having consulted with her financial adviser, Chang had decided to allocate 10% of her investable funds to alternative assets. She had further decided that she would split that allocation between real estate and private equity. A close friend who was an active angel investor had encouraged Chang to investigate angel groups as a means to investing in private equity. Joining an angel investor group, he had told her, would allow her to share her considerable expertise, learn from others, and simultaneously profit from the exchange. When she initially started researching angel groups, Chang's objectives were to evaluate the groups solely in terms of their business models. Now, having researched and learned more about the different groups, Chang was more circumspect. She thought about how a group's choice of model might affect its ability to succeed in the current environment as well as in the future. She was also concerned how the different structures might affect her ability to achieve her personal objectives. She thought about each model in terms of investment opportunities, networking opportunities, and overall fit with her personal interests and investment portfolio, wondering, “Is one model superior to the others?” The Band of Angels . . .