Re:The Good, the Bad, and the Ugly of Formal Angel Groups
by srlake on Friday February 15, 2013 @03:20PM
(#5228340)
I'd put forward another downside of angel groups, from the prospective of an entrepreneur:
Collusion - whether intentional or not.
The mere fact that you're meeting all, or a large percentage, of the possible investors for your round at the same time, and they all know each-other, the greater the chance they will be able to dictate terms and the entrepreneur may have little negotiating power. If one group (as may be the case in Dayton, OH - I have no idea) makes up a large percentage of local investors, look out!
Collusion - whether intentional or not.
The mere fact that you're meeting all, or a large percentage, of the possible investors for your round at the same time, and they all know each-other, the greater the chance they will be able to dictate terms and the entrepreneur may have little negotiating power. If one group (as may be the case in Dayton, OH - I have no idea) makes up a large percentage of local investors, look out!