Does angels syndication is about to kill angels behaviours?

Not so long ago, when angels investors was almost unnoticed, you had here and there some men with know-how on specific market that have some funds to invest. They were generally active in their industries and looking for horizontal or vertical integration. They make only few deals at the time, but invest enough to be listening in the board of direction, bringing mentorship, business network and sometime direct orders or distribution channels. They had the knowledge to identify ideas with great potential for their industry, and experiences to understand every milestones that a new organization must achieved.

Today, the trend is to form group of angels investors. The behaviour of investment had change with it. Instead of few strategic investments, angels look for a larger number of small investment, hoping that some of them will be home-run and pay for all the others.

This strategy brings a large flow of entrepreneurs to apply to angel groups, forcing the hiring of permanent personal to make first selection. As no one can have a good expertise on every market, the basic screening process is similar as VC firms one. First question is not anymore what is your innovations, your traction on you market. Now they ask: 1) What is you last year sales? 2) What is your last year benefit?  3) How much more profit will you generate if we invest?

This is not a bad strategy, but now the angel groups are in direct competition with smaller VCs that play in the same funding range. The good point of this is that there is more offer to entrepreneurs in growing position. The bad news is that there is now very little funding available for new concepts and disruptive innovations.

There is hope for start-up with the new law that permit smaller investment via crowdfunding, but before this new trend get strong, we may see few years with less than needed new corporations on the go.