What is the difference in an angel network and an angel fund?

The investors actively participate in networks, supporting the identification, screening and due diligence of opportunities and generally make their own independent investment decisions related to each project. Investors are less active in funds where the identification, screening and due diligence, as well as investment decisions are made by a small group and the monies the investor committed to the angel fund is invested on their behalf by this group. Investment into a fund results in the investor participating in all investments of the fund.

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Definitioner

Human Relations

Screening

A process utilized by individual investors, angel groups and VC funds to determine their interest in investment opportunities. The screening may be informal or formal in nature and typically includes an assessment of the opportunity against the investors previously determined criteria for investment.⁶

Due Diligence

A process undertaken by potential investors — individuals or institutions — to analyze and assess the desirability, value, and potential of an investment opportunity.³
This is the process whereby individuals or groups of people conduct independent investigations regarding a particular matter. In the business world, investors conduct timely due diligence when inquiring about prospective investment endeavors. This may entail a background search of the company’s founders, review of the entrepreneur’s credit scores, and routine follow-up with references and associates, etc. New business owners, on the other hand, are encouraged to also conduct due diligence when finding a potential investor. Through due diligence, both the investor and entrepreneur has the opportunity to diligently analyze and assess each other for the potential of an investment opportunity and partnership.⁴
Due diligence is the process of investigation and evaluation, performed by investors, into the details of a potential investment, such as an examination of operations and management and the verification of material facts.⁵

Angel Fund

A formal or informal assemblage of active angel investors who cooperate in some part of the investment process. Key characteristics of an angel group are: control by member angels (who manage the entity or have control over the entity’s managers), and collaboration by member angels in the investment process.³

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