The term “angel investor” used to conjure up an image of an old guy with tons of money to invest in young, fledgling companies. But DC-based NextGen Angels is changing that image, not only in DC but in four new cities. The average age of most angel groups is 54, while NextGen’s is 37.
New York, Chicago, Boston and Austin are now building networks of entrepreneurs in their 20s, 30s and early 40s with money to invest in startups. Members participating in a round can throw in as little as $10k. Dan Mindus (above) launched NextGen in early 2013 and is now eyeing Atlanta, Philly, Raleigh/Durham, LA, Seattle and Denver/Boulder. Silicon Valley is planned for 12 to 18 months down the line. The groups meet monthly to hear pitches from two companies in need of $250k to $750k. Each city make five or six investments per year, which means about 25% of the presenting companies get funded.
Dan says young, successful professionals are willing to invest in high-risk, high-reward companies because they’re still earning money from their own careers and will likely have more success. They may not see exits for seven to 10 years, but they like the idea of helping to fund and support their local entrepreneur ecosystem. NextGen, which recently invested in DC-area companies like Urban Stems, Interfolio and Virgil Security, generates revenue through member dues and corporate partnerships with companies like Capital One and Booz Allen. NextGen will eventually get a percentage of portfolio company profits.
