Building an Investment Ecosystem
Our membership model for Community Equity Partners is simple:
Find an amazing Chapter President with lots of investing and business experience to lead a local group. That Chapter President will bring in friends, those friends will bring in friends — and everyone will help bring in local businesses to be considered for funding.
Collect great deals across multiple chapters, then feed only the best back to our Chapter Presidents for potential pitches. Set up the meetings, let members see what the network offers, and everyone has more deals to choose from.
More variety = more diversity in your portfolio, more options for your annual investing commitments. More members = more expertise within the network to lean on and ask about subject-matter specifics.
Even though it seems simple enough to us, we still see many of the same concerns from potential investors and entrepreneurs. Here are some of our ‘Frequently Asked Questions’ and how we meet these challenges.
“I’m worried that if I embrace a group with further reach, capital won’t go to businesses local to me.”
This investor is exactly the kind of Angel investor we like. They care about their local businesses and regional success. They want to see money go into the hands of their neighbors, and we do too. The truth is that isolating your local ecosystem isn’t good for anyone. Companies that can’t compete on a broader scale will never be successful. Entrepreneurs need to be challenged early and often to learn how their businesses really work. By comparing your local deals to deals from other, similar markets, both investors and entrepreneurs continue to raise the bar — because doing anything else is leaving money on the table.
If you make happy investors, more investors appear! Focus first on making happy, successful investors, and they will drive a local ecosystem that brings new entrepreneurs in and makes more room for regional capital with equal enthusiasm.
“I’m already a member of another investment group, why would I join this one?”
Most investor groups have some kind of specific bias. Whether you’re looking for deals in Agriculture, MedTech, AI or Commercial Real Estate, there’s likely to be a group with a singular focus for you to join. That’s great, but diversification and “spreadsheet investing” is key to reducing risk within Angel Investment. Asymmetric returns require discipline. One way our group works to de-risk investments is to draw on broad knowledge from across our entire syndicate of investors and entrepreneurs, past and present. That’s thousands of people with decades of experience in very specific niches, and they’re willing to talk about how those niches present themselves in different deals we present. Investors are welcome to jump in on deals they understand, but this extra knowledge, and having Subject Matter Experts on hand, helps CEP investors get informed on deals they might otherwise have overlooked.
“Does your group really bother with Pre-Money or Seed Stage companies?”
We love this question. Like the first on our list, it means that the investor we’re talking to is really focused on helping small businesses grow. That’s the core of Angel Investing, and it’s in our DNA at Community Equity Partners. With a broad range of investors in our group, we see all kinds: some that LOVE Seed companies. Some that love Growth companies. Some that only go for late-stage deals. The way we’ve structured our system, we have a continuum that meets entrepreneurs where they stand, from Seed to Exit, and helps engage and support them at every stage in between.
With 100+ active investors, it is not hard to find 10 that want to go in $5K each on Series Seed. When a company is performing as expected, our investors often follow up with even more capital. That process accelerates our investments towards an exit, and is the magic of a broad, syndicate group approach (which we thing we do better than anyone else in the market!). The good news is we also understand that success means sticking with these companies over time and continuing to invest larger sums. And, our model is working as designed.
After 20+ years raising or investing money, the biggest mistake we see is that most communities focus on the entrepreneurs and treat investors as superfluous to the activity. We see it over and over again, great start-ups do NOT precipitate great investors within the ecosystem. The opposite is actually true: investors create an ecosystem for great start-ups, because they know how to evaluate and share risk. Organized investors are the catalyst, not hapless participants, in this ecosystem development. We love to support great entrepreneurs by lifting them up. Don’t let your “yes” men overshadow evidence: they’re happy to stand on the sidelines and cheer you, but investors are running the race with you.
When everyone is informed, has skin in the game, and knows something good is always coming next, that’s how you build a great ecosystem. Come join us!
