About 220,000 angels were active in the United States in 2004, according to the Center for Venture Research at the University of New Hampshire. Fifteen to 20 percent of them did their investing through angel groups. These groups have signature investment styles and processes for sizing up entrepreneurs.
 Members of an angel group can take advantage of one another’s industry experience to make informed investments in sectors with which they are not personally familiar. “A big group has 40 or 60 or 100 people who are experts in different things,” says James Geshwiler, who manages CommonAngels, a group in the Boston area.
Unfortunately, as Artour Baganov, a founder of Alliance of Angels in Seattle, points out, an investor simply sticking to industries he knows takes risks. “If you invest entirely in semiconductors, it does not matter how much of an expert you are; when the sector is down you’re still going to be in trouble,” he says.
This is one reason for the popularity of angel groups—members benefit from one another’s experience, and thereby diversify their portfolios without making uneducated investments. Deciding how much to rely on others is the trick. During the bubble, members of angel groups often relied entirely on the advice of others, only to regret it later. Chris Somogyi, a member of the Alliance of Angels, avoided the dot-com hype, but relied on advice from friends and colleagues in deciding to invest in what would become the loss-battered telecommunications sector. “It didn’t work out very well,” he admits.
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