Angel Investor Groups Gain National Recognition among Top Private Equity Investment Firms for Early-Stage Business Financings; Angel Capital Association Members Near Top in Annual Rankings.

KANSAS CITY, Mo. -- Angel investor groups are gaining increased national recognition as primary investors in early-stage businesses, achieving top rankings in an industry-leading annual survey of private equity investment firms for entrepreneurs.

According to the national MoneyTree Survey and an article published recently in Entrepreneur Magazine, three member groups of the Angel Capital Association (ACA) are among the top 100 Venture Capital Firms For Entrepreneurs for 2004. The MoneyTree Survey, conducted as a collaboration between PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association, ranked these 3 firms among the top 15; ahead of many traditional and well known venture capital firms.

Ranked by number of "first sequence financings of seed/startup or early-stage companies," ACA members Tech Coast Angels of Irvine, CA, posted 7th (tied with 4 other groups), and both The Angels' Forum & Halo Fund of Palo Alto, CA, and Band of Angels of Menlo Park, CA, posted 12th (tied with 5 other groups).

"Angel capital is an emerging piece of the financial food-chain; like venture capital was in the 1970s," said Ian Sobieski of Band of Angels. "Just as with VCs back then, angel groups are beginning to be taken seriously by the incumbent financial players, and their prominence in the MoneyTree rankings are evidence of this trend."

As Silicon Valley's oldest organization still dedicated exclusively to funding and advising seed-stage startups, the Band of Angels is a formal group of 100 former and current high tech executives who invest their time and money into new, cutting-edge, startup companies. Band members have founded companies such as Symantec, Logitech, and National Semiconductor and been senior executives at the likes of Sun Microsystems, Hewlett Packard, and Intuit.

Angels are typically high-net-worth individuals and "cashed out" entrepreneurs who are interested in mentoring other entrepreneurs and are actively engaged with the ventures they fund, both pre-funding and post-funding. In the past several years, an increasing number of angels have joined together to form angel groups in order to pool resources and investment expertise. There are an estimated 200 such angel investor organizations in the United States.

"Angel investor groups have become major players in providing equity capital to early-stage ventures," said Luis Villalobos, the founder of Tech Coast Angels. "Angels have gone from investing as individuals and sometimes forming ad hoc groups for certain investments, to creating formal groups with robust venture capital-like processes. As the percent of venture capital dollars invested in early-stage companies continues to drop relative to the total dollars VCs invest, angel groups will play an increasingly important role in the funding of these ventures."

Since its inception in 1997, TCA members have personally invested $58 million in 91 companies and have helped portfolio businesses attract $552 million in additional capital, mostly from venture capital firms. TCA has more than 270 members in its four networks in Los Angeles, Orange County, San Diego and Westlake/Santa Barbara.

"As the venture capital community itself evolved and became more sophisticated, so have angel investor groups," according to Marianne Hudson, executive director of ACA and entrepreneurship director of the Ewing Marion Kauffman Foundation, which sponsors ACA. "Many of today's angel investors are far more educated about investment in great part thanks to such sophisticated angel groups who have shared best practices," she said.

"Any individual angel investor can benefit from the group's learning if they join a thoughtful group of active angel investors," said Carol Sands of The Angels' Forum and The Halo Fund. "As the individual investors in the group structure become smarter and start getting a higher rate of return, it is only logical that the amount and strength of that group will increase."

The Angels' Forum (TAF) is a private, closed group of 25 investors, including individuals and small corporate and family venture funds. The Halo Fund is a venture capital fund that co-invests with The Angels' Forum on deals that meet certain investment criteria. TAF is a member of the National Venture Capital Association (NVCA) and ACA.

The Angel Capital Association was formed in January 2004 and is a program of the Ewing Marion Kauffman Foundation. It is the preeminent North American association of angel investor groups. ACA's mission is to advance angel investing by supporting the development of successful angel groups, educating investors, sharing best practices and industry data, building public awareness, and establishing professional standards. Currently, 93 angel groups throughout the United States and Canada are members of the organization, including forty-eight founding groups.

The Ewing Marion Kauffman Foundation of Kansas City is a private, nonpartisan foundation that works with partners to advance entrepreneurship in America and improve the education of children and youth. The Kauffman Foundation was established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman. Information about the Kauffman Foundation is available at www.kauffman.org.