John May, the president of New Vantage angel club management firm, is rapidly changing the face of angel investing. May’s investment model stresses on group investing, through which, he attempts to change solitary high-risk ventures into a collective effort. Although hardly a new concept, it is May’s handling of the investing model that is helping to break the mould of traditional group investing
In May’s investment model, high net worth investors are welcomed to commit their money, as well as their expertise, business and time to select the most attractive investment opportunities. May does not support the confinement of fund managers to juggling all investments. Instead, he believes that “there is strength in the number of angels” and that their experience is valuable to any venture. May opines that angels should aggregate their resources and experiences, and that the ultimate aim of all ventures is to benefit from their expertise. According to May, angels should not act like ”a Lone Ranger”, and neither do ventures only “want their money and expect them to go away”. Instead he believes that investors with entrepreneurial talent are the sources of brainpower, time and contacts.
Putting his ideas to work, May has formulated his angel investing model to work in the following way
- May welcomes at least 50 angels per club to invest an equal amount of $100,000 – $150,000 each, depending on the investor club they belong to.
- Each month, New Vantage meets to hear presentations from companies applying for angel funding. May’s management club invites entrepreneurs to pitch at club meetings after careful screening
- Following presentation, members of the management club discuss the applying company’s merits and perform due diligence. Angel club members are given equal voting rights, which they may use to invest or decline a company’s funding request.
- Investing between $250,000 and $1 million in private businesses, angel clubs will also co-invest with venture capital firms.
May’s private investing model offers security in its number of angel investors and their expertise. Collective investing has major advantages like a big bankroll and talent resources. Compared to a lone investor, May’s angel club offers its members less risky deals. Besides, May’s investment model relies heavily on investor talent, making good use of member input and intelligence, making the whole team investing idea work.
Having acquired a fertile ground for angel investing business in Washington D.C, New Vantage is steadily building its database of portfolio companies. These companies however, are yet to be acquired or go public. While this disallows gauging May’s investing success, the remarkable growth in private investors indicate the extent to which investing clubs have faith in May’s investment model.
John May’s investing model is backed by experience exceeding 20 years in the field of venture funds. Well versed in private equity, May has co-authored the “Every Business Needs an Angel” book in support of his ideas. May’s personal portfolio over the last two years, with cashed-out entrepreneur Cal Simmons, includes the Washington Dinner, eMedia and Dinner Clubs churning $23 million under management and undertaking 16 transactions. May’s fourth club venture is possibly the WomenAngels.net club with 85 women private investors acquiring membership
Since venture companies often partner with angel investors, May concludes deals with venture firms through club members introducing entrepreneurs, referrals and word-of-mouth. May is actively involved in introducing his angel investor model across America. In selecting locations for his clubs, May bases his choice on the following criteria:
- Near proximity of angel clubs to high-tech companies.
- Active venture companies in immediate location of the angel club.
New Vantage has launched angle clubs in Richmond, Virginia and in Connecticut called the Connecticut Launch Club, which he manages now, having partnered with Trautman Wasserman of New York. May also has plans to expand New Vantage by setting up clubs in Texas, Northeast and Midwest. To his investing business in Washington, May provides the following administrative services:
- He finds candidates
- Networks with co-investors and entrepreneurs
- Handles administrative costs, including taxes and accounting.
As general partners and managers of a venture, New Vantage draws 15% of all returns on investments, and also 15% of profits from members making investments with the club.
May is ambitious and believes his investing model will succeed across America through a national network of angel clubs sharing deals, due diligence and building investor community. Emphasizing on private equity becoming a critical component of investor portfolio, May opines that angel clubs can be highly profitable for private investors, since they are more efficient ways to form investment partnerships