2017 will be a year of choices: one where many angel investors will decide to bring their early-stage investment strategy closer to their strategy for impact giving without sacrificing their expectations for strong returns on capital invested.
When answering the question of "how do I align my values and impact goals with my angel investing' affinity investing should be an important part of the answer.
Affinity Investing can be defined as: investing in members of ones' own peer community to empower and grow the capital in that community.
This approach works for every community from academic institutions, to gender, to LGBT, to immigrant communities.
Affinity Investing works to expand impact in three primary ways:
1) It develops successful startup companies, increasing the visibility of successful founders from the community, and the community itself.
2) It enables capital investing by members in their peers, which itself fosters stronger individual mentor-mentee relationships, and overall mentor networks, that transcend that single investment
3) It creates an ecosystem for that community in the startup world that didn't exist before, and all members can benefit from that ecosystem.
Equally important, the affinity that member-investors feel for founders creates a dynamic where they help more than normal, which, when scaled across a large membership, helps increase performance and returns as well.
There are already great examples of affinity investing working to achieve these goals.
Golden Seeds, which has been investing in female-led companies for a decade, has both a group with dozens of members in cities across the US, and a set venture fund. I was a member for several years and can attest to the exceptional nature of many of those who received investment, and its profound impact. 37 Angels, also for female-led companies, has had a similar impact.
In alumni networks, Harvard Business School Angels, Stanford's Start X and its associated angel network, and Red Bear for Cornell all have played a major role in making those schools among the best for entrepreneurship development in the world. I have helped build a similar network for my alma mater, Johns Hopkins, with Blue Jay Syndicate and A-Level Capital.
In the LGBT space, Gaingels, my own syndicate, has now become the second-largest affinity investment network in the world, and we intend to lead investment in well-over a dozen companies in 2017, from our chapters in New York, Los Angeles, London, and Washington, DC.
2017 will be a tumultuous year for many communities, particularly those that depend on increases in equality and sharing of opportunity. This gives investors the chance to provide greater impact than ever before. I believe, as I continue to help develop the field, that affinity investing is a major part of the answer.