ARC Angel Fund

A member-led angel fund for New York start-ups

ARC Angel Fund invests from its third fund in seed-stage and early-stage companies with high growth potential, with a main focus on New York City and the surrounding Northeast and Mid-Atlantic. Its site says the search can run from Pennsylvania to Massachusetts. It describes the structure as a committed fund with sidecar investments, which means members can invest personally alongside the fund as well as through it.

Part angel group, part venture fund

The fund explains an angel fund as, in essence, a hybrid midway between a group of angels and a venture fund. Its members range from experienced angel investors and partners in venture funds to executives of successful companies, and each brings expertise from the industries they know. Members can take as active a part in investment decisions as they like. What separates it from a conventional venture fund is ownership: the investors themselves own the general partner, and the wider membership votes on each investment.

What it looks for

The fund invests in industries where its members have experience: software, IT and internet businesses, services that rely on technology, digital media, mobile, and health IT, as well as business services and other fields. Its early-stage targets are businesses past the idea phase, with a working product and first revenue, and it states a ceiling on the valuations it will consider.

How a deal moves through the committees

Committees handle the fund's business. An executive committee of volunteer members of the general partner oversees the fund. Opportunities arrive from members, affiliated organizations, fund managers and other institutions, and companies can also submit through the website; they must send a presentation deck and financials with their executive summary. An evaluation committee reviews each one and, if it chooses, prepares the company and its founding team to present to the members. A due diligence committee is set up for each company the members approve for further work, makes a recommendation, and after a vote prepares a term sheet and negotiates terms. After an investment, a monitoring committee works with the portfolio company and reports on it at monthly meetings, covering management changes, later funding rounds and business milestones.

Portfolio exits

The site's list of portfolio companies includes several that have since been acquired, among them a mobile advertising network, a mobile creativity app, an online marketing platform for retailers and an outplacement service. Others in the portfolio work on artificial intelligence applied to diagnostic data, social audience data and smart menu services for restaurants.

ARC Angel Fund is a member-led angel fund that backs seed and early-stage companies, mainly in and around New York. It is investing from its third fund and its search reaches across the Northeast and Mid-Atlantic.

The structure sits between an angel group and a venture fund. The general partner is owned by the investors, and the general membership makes the investment decisions.

Products and services

• Seed and early-stage investment: backs companies that already have a product and some revenue.
• Member expertise: members range from experienced angels and venture partners to company executives, and they can invest alongside the fund.
• Committee review: evaluation, due diligence and monitoring committees handle each deal from first pitch to portfolio reporting.
• Sidecar investments: the fund is committed capital, with sidecar investments available.

Clients

Founders in software, IT, internet, tech-enabled and business services, digital media, mobile and healthcare IT, among other sectors where members have experience. Applicants must send a presentation and financials with their executive summary.

Key facts

• Focus region: New York, the Northeast and Mid-Atlantic
• Fund: third fund, currently investing
• Structure: member-led, with an investor-owned general partner