FREQUENTLY ASKED QUESTIONS
The following questions posed by real angel group leaders and actual answers are intended to explain and clarify the Angel Treaty’s operations:
Q. In the Angel Treaty, the angel group leader is to obtain the agreement of each group member – what is your experience in doing this and how?
A. It is recommended that the group president or manager bind members to the terms of the treaty in writing when they either renew or initiate their membership. Provide each member with a copy of the treaty, and have each one sign an enrollment (or re-enrollment) form whereby, as a condition to membership, the member agrees to abide personally by the terms of the Angel Treaty with respect to investments made via the group. The Enrollment Form is available for download from Resources.
Q. Effectively, the signatory’s angel group is being asked to sign a document as the middleman between the individual interested members and existing Angel Treaty signatories. What disputes have occurred since the Treaty’s inception and how were they resolved?
A. We are not aware of any disputes having arisen. However, it is difficult to envision a scenario where a dispute would become known to a third party. The main impact of the treaty–when the leader asks angel group members to agree to its terms–seems to be to remind people that they should satisfy themselves independently of the wisdom of their angel investment decisions, and not blame others if their investment returns are less than anticipated.
Q. What should I do if my group is asked to share its due diligence materials with a group that is not an Angel Treaty signatory?
A. We recommend that angel groups facing the possibility of sharing due diligence materials with a group that is not a signatory refer the other angel group’s leader to this site in order to enroll the new group as a signatory.
Q. What effect does the legal status of a group (e.g. LLC vs. unincorporated partnership) have on the Angel Treaty’s effectiveness?
A. Since the premise of the treaty is that the signer agrees to make a good faith effort to bind individual members to agree not to sue if the shared due diligence turns out to be inaccurate, the group’s legal status does not matter as much as the fact that potential signers must understand the import of the commitment.
Q. At what time, after a group has signed the Angel Treaty, does the Angel Treaty apply to the group?
A. The Angel Treaty becomes effective as to a given group upon said group’s signing and faxing of the treaty document, and not when its name has been added to the signatories list on this site.