Building Minnesota’s Angel Movement
In the last two years, I’ve learned two truths about angel investing in Minnesota: 1) There is an energized and growing community of angels actively investing in local deals, and 2) that activity is made stronger when angels invest together.
Backing up, in Spring of 2020, Reed Robinson set out to form a new Minnesota-focused venture fund called Groove Capital, and I joined shortly thereafter to focus on our angel network, the Groove Investment Group. In a relatively short amount of time, we curated a vibrant community of more than 150 Minnesota-based early-stage investors.
If that number surprises you, just wait.
Groove Capital and Forge North embarked on a scope of work to better understand the investment activities in the area and learn how to engage more angels across the state. We estimate approximately 80,000 people are accredited investors; yet, less than a thousand people participate as angel investors in the state. If we are only seeing the tip of the iceberg, the question then becomes how big can this get? And what impact will more angels have? We spoke with hundreds of practicing and would-be investors to understand better their personal barriers and motivations to angel investing.
We found it is generally not a lack of interest holding accredited investors back. Instead, common barriers include needing more education on angel investing; wanting increased and continuous exposure to early-stage investment opportunities; craving an approachable community of peers; and time constraints.
More interesting were the expressed motivations driving angels to invest in the first place. Surprisingly, the top of the list includes things like a desire to have deeper impact with their money, an interest in investing locally, wanting to support female and/or BIPOC founders, and mentoring and networking with other likeminded investors.
As someone who comes from financial services, I was a bit surprised by this. An interest to diversify investments beyond traditional assets is occasionally mentioned, but pure talk about financial gains happens later in the conversations, if at all. But don’t misinterpret that: I full-heartedly believe a healthy return (across a portfolio) is vital to keeping angels active.
Building a new community of angel investors in the middle of a pandemic was not without its challenges. Women and BIPOC investors are still underrepresented. While we continue to do the work to combat this, we are up against decades of unequal access to participate in the workforce at all levels, pursue educational opportunities, and build generational wealth. Practicing patience, listening, providing additional education, and offering access to a community of trusted peers has helped us move the needle, but there is still work to be done.
New angels have come online in droves and are putting their money to work. Show me the numbers, you ask? In 2021, we documented almost $600,000 in angel investments across 20 deals through Groove’s network. So far in 2022, our angels have committed $1.3M across 12 deals—not bad considering it’s only May.
How is angel investing better together?
Community builds confidence. We’ve witnessed angels introduce deals to other angels. New investors learn from seasoned ones. We’ve also watched subject matter expertise get shared to sharpen an investment decision. Our angels have not always agreed, but they are happy to practice their craft within a network — and a process — that is stronger with company.
Angel Fest takes everything that we’ve learned and bottles it up into a full day investor focused conference. We invite current and interested angels (sorry founders) to see it for yourself on June 2. There, we’re going to connect with other thought leaders, continue to learn together, and inspire each other to fund the future of Minnesota.