SMa Angel Investment Management Initiative (AIM)

In 2009, SMa embarked on a new initiative to help members seize investment opportunities in technology and innovation to improve business capabilities and move up the value chain. This is an extension of the MOU with Exploit Technologies, a commercialisation arm of A*STAR.

SMa has formed an Angel Investment Management (AIM) Interest Group to provide interested manufacturers a platform for exposure to angel investment in local young start-ups.

The SMa AIM Interest Group offers

Access to latest technology developments in Singapore and in the region
Qualify to join Angel networking events organized with Exploit Technologies, BANSEA, SVCA, SPRING and EDB
Access to investment opportunities in potential local and foreign start-ups
Opportunity to provide mentorship, insight and financial support to potential start-ups and steering them to profitable organizations
Sharing of industry knowledge and expertise via these networking platforms
Access to a large pool of intellectual property portfolios & pipeline of start-ups from A*STAR and other established AIM networks
Access to other Angel investors to upgrade your existing business operations or venture into new business areas.

What is an Angel Investment Groups?*

Angel investors have proven themselves to be an integral part of the capital market, particularly for funding start-up companies and providing first-phase financing of businesses. The term “angel” originated in ther early 1900s and referred to investors who made risky investments to support Broadway theatrical productions.

Today, the term “angel” refers to high-net worth individuals, or “accredited investors,” who typically invest in and support start-up companies in their early stages of growth.

In the financial world today, angel investors are a critical and essential part of a healthy economy, particularly for the establishment and growth of early-stage companies. Experts estimate that, on a cumulative basis, the level of investments made by angels over the last 30 years has been double that of investments made by venture capitalists.

In addition to the value provided by early funding, angel investors are typically experienced professionals who can offer wisdom and guidance to the entrepreneur and who have the patience to allow time for normal company maturation. With few exceptions, angels invest on a regional basis, being interested in personal relationships with companies and employees, as well as in giving back to their communities.

Angel Groups

Angel groups, which have more resources than individual angels, are playing a more crucial role in funding young companies, as well as in funding second-stage companies, leveraged buyouts, and spin-offs. Historically, the funding gap between investments made by friend and family and the point at which companies could realistically obtain financing from venture capitalists was between $ 500,000 and $2 million in invested capital. Individual angels could often meet these funding needs. However, with venture capitalists moving further up the funding chain by not investing as early in a company’s development, a second funding gap has emerged between $2 million and $5 million. Added to this problem of venture capitalists preferring larger deals is the definitive drop in venture capitalists funding seed or start-up stage companies.

Funding Gap

The following table and graph demonstrate this trend in the last few years of significant decrease in venture capital funds both of numbers of investments and of total dollars invested.

The relatively new funding gaps of $500,000 to $2,000,000 and most recently also $2,000,000 to $5.000.000, combined with the fairly recent precipitous drop in overall venture funding, has created a domino effect of problems for early-stage companies, particularly for companies in late “start-up” or “first-stage financing” phases of critical growth and momentum. Angel groups can be a solution.

Angel Groups Vs Individual Angels

Few individual angels can accommodate the increased dollar needs of growing entrepreneurial companies, particularly in the $2 million to $5 million range, before venture capitalists are considering investments, and at a time of critical growth for a young company. But, by combining resources of individual investors, angel groups can be the proverbial white knights. Funding this second gap of $2 million to $5 million typically required a co-investment strategy, and angel groups can be a potential solution through the combined funding resources of a group of individual angel investors. These groups also have the combined manpower for analysis of multiple or complex investment opportunities, further aiding in making these investments possible.

* Article taken from Susan L. Preston 2004 Angel Investment Groups, Networks, and Funds: A Guidebook to Developing the right angel organization for Your community.