I've been out in the bay area now for a little over a month, and I'm seeing an interesting trend in how angel networks are perceived. Some VCs that I talk to are very interested in working with angels, and see the value of Angelsoft as having aggregated all these different angel investors into one place, making it easier for VCs to engage them. This is a great positive attitude, and I think the VCs could benefit a lot from angels. Angels definitely have some advantages over VCs, that shouldn't be down played. Ron Conway points some of them out here, and Roger Erhenberg has been talking about how "Super Angels" are going to dominate for a while.
The flip side of this argument, and one I'm hearing just as often, is that angel networks are a waste of time and tough to deal with. I didn't understand where this sentiment was coming from until I had a more in-depth conversation with Jeff @ Softtech VC.
His criticism was one more directed towards the time spent raising capital. He hates that startups have to spend time raising money, and he feels that non-specialized angel networks can take too much time.
For a web2.0 company to go pitch to 80 investors with varying interests along side a biotech company and a retail company, that startup may not get the attention they deserve. Even if they do, it make take much longer for a group of people to organize and decide to invest, than it would with an individual angel.
This concept also adds to the case for super angels being the best route. Investors that are quick, can do deals anywhere, and are well connected across the startup community. I think it also makes a great case for sector focused angel networks.
In the end, since this angel network = slow and inefficient concept seems to be pretty wide spread, I think its a great thing for the networks to be aware of. Yes, we're talking generalizations, and we all know there are some really great networks out there, but if the Venture community is going to become more efficient as a whole, all the parts need to work better together.
Its really all about reputation. Investors are starting to realize that from the entrepreneurs perspective through sites like the funded, but its more than that. You also have a reputation to maintain amongst investors. Realize that if you're not sector specific, that you need to find someone who is, so you can provide value to the entrepreneur. Be even more aware of how long you take to get back to those entrepreneurs, because this is a big deal to them, and if they have VCs backing them (as angels), you need to take care to protect your reputation with investors too!