How to build an angel investor network in your city, step by step

Key Takeaways

• When an angel group that already works decides to invest, the company does better. In a study of 13 angel groups based in 12 countries, companies that landed just above the investment cutoff were 14% to 23% more likely to survive and grew employment 40% more than those just below it (Lerner et al., 2018). There is no equivalent evaluation of networks built from scratch by an institution.
• In Latin America many networks are born inside an institution and fade when that institution stops supporting them. In 2012, of 28 networks identified in the region, 21 were still active, and eight of those that reported data received more than half of their income from a public source or a foundation (IESE for the MIF, 2013).
• The hardest thing to find is experienced investors. In IESE's 2012 survey, 28% of network members had never made an investment and 54% had closed only one or a few.
• In a mid-sized city, the network works best when anchored in local industry, because business owners in that sector know how to evaluate the solution and gain access to technology their own companies lack, according to Israel Pons, founder of the Angels Nest network.
• Business owners are convinced by a respected peer who has already invested, more than by returns from mature markets.

A chamber of commerce or a local government that wants more investment for its companies usually starts with an investment event, and almost always discovers that the problem lies earlier. Business owners with capital exist, but they don't see themselves as angel investors, they don't know how to evaluate an early-stage company and they have no one to invest with. An angel investor network solves those three things: it brings investors together, trains them, brings them screened projects and supports them until the deal closes.

This guide is for anyone who wants to promote a network from a chamber of commerce, an economic development office, a university, a foundation or a cooperation program. It is part of our series on how to design a business support program. It combines published evidence on angel networks with what two people who have spent years building them shared: Linda Smith, Chair Emeritus of the board of the Angel Capital Association in the United States and Co-Chair of the Global Business Angels Network, and Israel Pons, founder of Angels Nest. Both spoke at the Angel Investing Demystified workshop, which Jonathan Ortmans organized in October 2026 for the GET Fellows of GEN and IDB Lab. If you first want to understand what an angel investor is and how they invest, start with what an angel investor is and how it works in Latin America.

What is an angel investor network?

An angel investor network is an organized group of people with wealth and business experience who invest in early-stage companies. The network looks for projects, screens them, organizes the pitches and helps with due diligence and negotiation. Each investor decides whether to put in money, and many networks allow several of them to invest together in the same company.

The study Las redes de inversionistas ángeles en América Latina y el Caribe, which IESE prepared in 2013 for the Multilateral Investment Fund (MIF, now IDB Lab), distinguishes two models. The club brings together a few investors who already know each other and run it themselves. The open platform admits inexperienced investors and has a hired manager. The platform model dominates in the region, because almost no network is built on investment activity that already existed: the network has to create its own market.

That study is still the most complete regional census we found. The number of networks has grown since then, and around 2020 Xcala, the angel network initiative backed by IDB Lab, spoke of more than 40 in the region. The 2012 figures we use here help explain the underlying problems, which network managers still describe in similar terms.

Is it worth it for an institution to promote an angel network?

It is worth it if the network actually invests, and that requires sustaining it for several years. The evidence on the effect of angels is good. William Kerr, Josh Lerner and Antoinette Schoar studied two angel groups in the United States and compared companies just above and just below the level of interest that led to investment. The funded companies survived more and grew more (Kerr, Lerner and Schoar, 2014).

Lerner, Schoar, Sokolinski and Wilson repeated the method with 13 angel groups based in 12 countries, including Argentina and Mexico, that evaluated companies from 21 countries (Lerner et al., 2018). Funded companies were 14% to 23% more likely to still be alive a year and a half to three years later, grew employment 40% more and were 10% to 17% more likely to have a successful sale or exit. Outside the United States, angel investment also helped companies raise the next round, which the authors read as a sign that the angel group acts as a gateway to later capital where that capital is scarce.

That result needs a careful reading. The authors studied active groups with mature selection processes, probably better than average, and they warn that their estimate is closer to the ceiling than to the typical case. What they measure is the effect of a working group deciding to invest. They don't measure whether a network created by an institution gets to work, and the IESE study shows that in the region many did not. The value for the institution lies in the investments the network closes and the support that comes with them.

Why is it so hard to get angel investing going in Latin America?

It is hard because those who have capital look at angel investing through the logic of their own sector. Israel Pons said at the workshop that the region has plenty of people able to write a 250,000 dollar check, and that many negotiate as if they were closing a deal in their own industry. Some founders receive offers in which the investor asks for 35% of a company that is just starting. With a stake like that, the founder has no room left to attract investors in the next round.

The arguments usually used to promote angel investing don't help either. Returns from New York or London come from mature markets, and a business owner in a mid-sized city has alternatives with known returns and less risk at hand. What does move them, according to Pons, is more personal: the idea of giving back to their region part of the wealth they made there, and the question of why they let the best founders in their city leave to look for money elsewhere.

The IESE study found the same thing in the 2012 data. In the networks surveyed, 28% of investors had never made an investment, 54% had closed one or a few and only 18% had several. Some networks closed one or two deals a year. Their managers pointed to three causes: projects poorly prepared for an investor, a thin base of technology projects in some countries and a lack of experienced investors.

Culture adds to this. In the region a business that fails is read as a personal defeat, and in angel investing losing money in several companies is part of the job. Investors who don't understand that from the start tend to quit after their first loss.

Who should promote the network?

The institution that is closest to business owners should promote it, such as a chamber of commerce or a trade association, because investors are the hardest part to find. The IESE study, based on a 2008 MIF guide, summarizes what each type of promoter brings and where it tends to fall short:

A chamber of commerce or a trade association convenes business owners every day. An incubator has the projects and lacks the investors. That is why alliances work, with one institution bringing the investors and another the flow of projects, under clear rules on which projects reach the network.

How to build an angel investor network in your city step by step

The steps combine Smith's and Pons's experience with what the regional data shows, in the order in which it makes sense to take them.

1. Anchor the network in the industry that already exists

Start with the industry that sustains your city, whether mining, agribusiness, construction, energy or logistics, and look for startups that solve problems for that industry. Business owners in the sector understand the problem and can evaluate the solution. They also gain something besides financial return: access to technology their own companies lack. Networks in capital cities compete for software startups with global ambitions, and a mid-sized city has better odds in the field it already knows.

2. Get someone respected to invest first

Linda Smith calls it getting the first pickle out of the jar. Before bringing the group together, privately persuade someone with influence in it to make the first investment, even a small one. When that person tells the meeting they have already put in their money, the others follow far more easily. IESE describes the same effect in investor-run groups: investment depends on the leaders, and when the leader goes in, the rest follow.

3. Appoint a manager and fund the first years

Every network needs someone who convenes, screens projects, organizes pitches and keeps the group together between one investment and the next. In the region almost all networks have a hired manager, who often also supports due diligence and negotiation. That manager costs money, and a network with few members can't pay for it with fees. Eight of the networks that gave data to IESE received more than half of their income from a public source or a foundation.

Before launching the network, decide how the structure will be funded and by when it must sustain itself on its own income. In Chile, CORFO co-funds angel networks through its Invierte program. Its 2025 call covered up to 70% of the project, capped at 50 million Chilean pesos and with 12 months of execution, and required the network to have at least ten investors when applying. At the other end, IESE recorded that Angel Ventures, in Mexico, got up to 90% of its income from member fees, activities, sponsorships and consulting.

4. Write the network's rules before the first meeting

A board or a legal department will ask who is responsible if a member loses their money. The answer must be written down before you convene anyone. The promoting institution convenes, trains and screens; the decision to invest always belongs to each investor, and the institution neither recommends investments nor receives or manages anyone's money.

At a minimum, the network's bylaws should settle:

• who can be a member and what financial profile is required;
• how conflicts of interest are declared in each deal, including those of the manager, the institution's directors and the partners that send projects;
• which founder information is confidential and how it is protected;
• whether the network charges founders and why. Charging only for explicit services, and never for access to investors, is the recommended practice;
• how a member leaves and in which cases they are asked to leave.

If the institution is public, also check with its legal team what it can fund with public resources in a network whose benefits are private.

5. Train investors before asking them to invest

Most members of a new network have never invested in a company that is just starting. Practically all the networks IESE consulted asked for more training for their investors, and the study recommends training those who don't yet see themselves as angels too. The training covers how to evaluate an early-stage company, why it pays to spread money across several, what stake is reasonable in a first round, what to review before signing and what an angel does after investing. That training is what prevents offers like asking for 35% of a company that is just starting.

Linda Smith gave a rule of thumb for investors: put no more than 10% of what you have available to invest into this activity, spread across several companies over the years, with money you are prepared to lose. The network can use that rule to explain the risk without turning it into an investment recommendation.

6. Organize group investing with legal advice

Several angels can invest together in the same round, with one of them as lead who negotiates the terms and coordinates due diligence. This is called a syndicate. Sometimes the contributions are pooled into a company created only for that investment, so the startup has one shareholder instead of twenty. Pons mentions tickets of around 3,000 dollars per person within a group, and IESE reached a similar conclusion: with inexperienced investors, investing as a group with small stakes encourages them to decide.

Pooling money from many people into a vehicle has rules in every country, and a call open to anyone can come close to taking deposits from the public or making a public securities offering, both of which are supervised. Before opening small tickets, define with a securities lawyer which structure you will use (a company per deal, a regulated fund or an authorized crowdfunding platform), who can participate and how much it costs to set up and run each vehicle.

7. Open the call to everyone and screen with a team

When a network says there are no good projects, the problem is almost always that few people know it exists. According to Smith, a network that announces it has money to invest gets plenty of applications, good and bad. The job is to receive them all and screen with clear criteria: a rubric, several evaluators and a rule for deciding the middle of the list, as we explain in how to select companies in an open call. Those that pass the screening then need thorough due diligence, coordinated by the investor leading each deal.

Many of the projects that come in are not ready for an investor. The networks in the IESE study named this as their main problem, and that preparation ended up being done by the networks themselves for the few projects they selected. If the institution already runs a business support or acceleration program, it can make it feed the network: an exit criterion that defines what being ready for an investor means, and a slot to pitch to the network's committee at the end.

8. Agree on milestone-based terms and think about the next round

Pons recommends being stricter than in the United States or Europe: release the money in tranches tied to concrete goals and put in writing what happens if they are not met, for example that there are no further disbursements or that investors can bring in someone to strengthen the area that is failing. Tranches work when they are few, with measurable goals agreed with the founder. Terms that are too harsh distract the founder and can scare off the funds in the next round, which review the shareholders' agreement before coming in.

The angel's role is to leave the company ready for that next investor. That is why the network should agree from the start, in every shareholders' agreement, how the angels' stake is protected in future rounds and how a possible sale is decided.

The first months: what to do and what to show the board

The steps above don't all happen at once. A reasonable sequence to get started:

1. List the business owners in the anchor industry who could become angels and talk privately with several of them.
2. Identify the lead investor and secure their commitment.
3. Decide who manages the network, with what resources and for how long, and write the bylaws.
4. Run the first training with the group before any meeting with founders.
5. Open the first call and bring to the group only the projects that passed the screening.

The first closed investment usually takes time, because the group has to learn before it decides. So the board can follow progress in the meantime, report indicators by phase:

Also agree on a decision point. If, when the agreed period ends, the network has no lead investor and no active investors, it gets redesigned. If it works, the goal is for the institution to move from running it to supporting it, as happened with Chile's first network when an experienced investor took it over.

Real case: what Chile teaches, from Santiago to Antofagasta

Chile is the country in the region with the most experience in state-backed angel networks. According to the IESE study, six networks were created there in the eight years before 2012, and four were still active, with varying levels of activity. Southern Angels, the first, was born at Universidad Adolfo Ibáñez and was later taken over by an experienced investor. It closed 20 of the 38 deals reported by Chilean networks, and even so, in 2012 its head described it as stalled. CORFO sponsored the creation of several of the others.

The study draws an uncomfortable lesson for those who fund networks. Incentives spark interest in creating them, though not all survive in the same environment, and keeping a network that doesn't work alive by force can be counterproductive. The ones that lasted stood out for how they operated: their management, their investor base and their deal flow.

Antofagasta, the mining city in northern Chile, shows the first two steps of this guide working together. Israel Pons works there training business owners who want to become angels, and he says that almost all the startups that reach that network solve mining problems. The mining business owner invests expecting a return and also access to technology for their own operation. Because they share the industry, investors can evaluate projects with judgment and trust one another. Pons uses this example in other countries as a model for mid-sized cities.

Frequently asked questions about angel investor networks

How many investors does a network need to start?

There is no fixed number. In its 2025 call, CORFO required ten to co-fund a network in Chile, and IESE found in 2012 that many networks in the region had fewer than 35 members. A group run by the investors themselves, with no manager, works with up to eight or ten people. Beyond that, it needs someone to manage it.

Who pays for running the network?

In the first years, almost always the institution that promotes it, with its own, public or cooperation funds. Over time, the network can charge member fees, sell services or find sponsors. It is worth agreeing from the start on the deadline by which the network must cover its own costs.

Does the network need its own fund?

Not to start. Most networks in the region work as platforms: each investor decides which company to put money into. The more experienced networks ask for funds that co-invest alongside the angels, and some clubs invest everything through their own fund. A fund requires rules, administration and oversight, so it usually comes once the network closes deals regularly.

Should we support a crowdfunding platform instead of a network?

They are different instruments, and some public programs support both separately: CORFO's Invierte program itself has one line for angel networks and another for equity crowdfunding platforms. In countries such as Colombia and Chile that kind of crowdfunding is regulated, and an authorized platform can pool many small investors into a single stake. Smith and Pons don't recommend it as a substitute for angel capital, because it doesn't bring the investor's support. Their arguments are in what an angel investor is.

How do you know if the network is working?

By the investments it closes. Count active investors (those who invested at least once during the year), deals closed and their amount, funded companies still alive and those that raise a next round. In the longer term, count sales or exits and the return of the portfolio as a whole. How to write those indicators with their technical sheet is in indicators for business support programs.

Where to start

Before calling an investment event, identify the industry that sustains your city and the respected person in that sector who would be willing to write the first check. Then solve what almost no one budgets for: who will manage the network during the first years, with what resources and under what rules.

If you tell us your city's anchor industry and what resources you have, we will review with you the design of the program that prepares companies to reach the network, the call and the indicators you will present to your board.

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Read also: What is an angel investor | What is an ESO