Alliance of Angels raised $1.3 million for a new “Innovation Fund” that will back 10-to-12 early-stage startups over the next year, mostly in the Pacific Northwest.

Founded in 1998, Seattle-based AoA is a nonprofit consortium of investors that typically invests around $10 million in 20 companies per year. That money comes from more than 150 AoA members, each investing individually.

AoA also had a traditional multi-year seed fund that it used to match investments made by its members, typically at 25% of what members invest collectively in a company.

The Innovation Fund is different. It’s not just for matching investments, and it gives AoA more flexibility to move faster when approached by entrepreneurs. It is also an annual fund, which allows new members to join in on a yearly basis.

“We think this is a good way to be careful while investing, but be more expeditious with it,” said Eric Larsen, fund administrator for the new fund.

Investment decisions are determined by member vote. There are about 50 participants in the fund. Returns are distributed on a pro-rata basis based on individual investment amounts.

Larsen said AoA drew inspiration from other angel groups using a similar strategy, including Tech Coast Angels of San Diego.

“They found that a lot of their members shifted from writing their checks individually to investing through the fund because they liked the diversification,” he said.

The new fund is sector agnostic, with about 70% of investments expected to go toward Pacific Northwest companies.

Much like other Seattle firms reaching beyond their backyard — Madrona Venture Group, Flying Fish, etc. — AoA is now looking across the country for investments.

“We still have preference for the Pacific Northwest, but we will look nationally,” Larsen said.

AoA has already backed two startups from the new fund.

Larsen said AoA is seeing impact from the economic downturn, specifically with downward pressure on valuations. “We’re paying more attention to financing risk — can a company continue to raise the money it needs?” he noted.

Initially started under the umbrella of the Technology Alliance, AoA spun out of the nonprofit in 2012. It has pumped more than $125 million into 200-plus startups, with more than 40 exits.