In 2009, Sand Hill Angels, a 50 member all volunteer group in Redwood City, CA, invested more money in more deals than in any previous year.

"Last year was our biggest and best year," says Ralph Eschenbach, member and treasurer of the Sand Hill Angels board. We didn't pull back.

Eschenbach attributes robust deal flow to engaged members, good processes, and economic conditions that have made VCs cautious and entrepreneurs willing to consider more realistic valuations.

"Our members are names in the community," he says. "We are seeing more deals and better ones through member referrals. With the Angelsoft software and our processes around deal management, we can track deals much better and keep more deals in the air."

Member-managed network model

Operating as a network with each angel making his or her own investment decisions, Sand Hill Angels targets investments of $300,000 to $400,000 and invests at least $100,000 in a round. There is no minimum individual investment required.

"Members typically invest from $10,000 to $40,000," Eschenbach says. "This allows them to diversify their investments. We are doing from eight to twelve deals a year."

About two-thirds of the groups investments are in Internet and advanced technology companies and about one-third are in life sciences businesses. Sand Hill Angels has had an exit through acquisition in each of the last few years.

Whereas some organized angel groups have mostly members who are independently wealthy, cashed-out entrepreneurs, or retired executives and professionals, many members of Sand Hill Angels are still pursuing active careers.

"People are working for a living," Eschenbach says. "Their involvement gets to that demographic. They want their investments to pay off, so they are willing to mentor and work with the companies. It's a good group size. You get to know everyone, yet it's large enough that the workload is shared. There is good camaraderie and broad expertise."

Sand Hill Angels sees about 40 to 50 business plans per month. Plans go through a screening call which narrows the list down to six companies. These companies present to a monthly screening committee. Up to three of the companies are invited to present at a dinner meeting. From there, interested members form a due diligence committee to evaluate the investment worthiness of the deal.

Sand Hill Angels averages two to three months from the time a business plan is first reviewed until they write a check. There is a fast track process for appropriate deals.

Seeking syndication opportunities

Sand Hill Angels participate with other angel groups, venture capitalists, individual angels, and smaller investors on deal syndication. Sometimes they put together the term sheet and take the lead; on other deals, they follow.

"We invest as one LLC in each company," says Eschenbach. "This gives us a lot more strength as a group rather than as individuals. It gives the company one line item on the cap chart instead of fifteen, and the VCs like it in follow-on rounds. Members can invest in any and all deals. We are presently on our 28th LLC."

Sand Hill Angels prefer to invest in their own geography.

"We are at ground zero for entrepreneurial investing," Eschenbach says. "We also look at deals from other places but aren't going to invest unless someone who is local also invests. We want someone local to provide supervision and be on top of things."

The group has done one deal in Boston and one in the District of Columbia. The deals were identified through another angel group and through an entrepreneur who came to California looking for investment capital.

Internships assist due diligence and educate

Sand Hill Angels has informal liaisons with the business schools at San Jose State, UC Berkeley, and Stanford, creating opportunities for students to participate in internship activities.

"The interns attend screening meetings and then do diligence for us," Eschenbach says. "They might research a market or competition. Its a good educational opportunity for them, and it helps us."

Sand Hill Angels has started a process to provide an internship path into some of the groups portfolio companies. "It's a way for students to do simple projects for the company and learn the entrepreneur way of life. It works out pretty well," says Eschenbach.

"Our bottom line is that we are very friendly to the entrepreneurial environment," he says. "We like to see good entrepreneurs. We welcome good members, and we like to do venture capital friendly deals."