Tuesday, April 19, 2005

Angel Investment Background

"First used to describe investors in Broadway shows, the term "angel" now is widely used for backers of businesses. Angels today fill the role venture capitalists filled 20 years ago. Now, venture capitalists generally will only fund companies that can grow huge, investing a minimum of a few million dollars, which leaves a big gap in funding for early-stage companies needing $200,000. Angels fill that gap."

"In 2004, angels actually invested more money in new companies than venture capitalists — a whopping $22.5 billion in angel funds compared to $18 billion in venture capital. According to the Center for Venture Research at the University of New Hampshire, 48,000 companies received funding from 225,000 active angel investors."

"The primary distinction between angels and venture capitalists is that angels invest their own money."

"They don't have to justify their investments to others, so they'll invest in a broader variety of businesses. They can have more patience in getting a return on their money, and they can invest in ideas that are just plain interesting, exciting or fun. Most are successful entrepreneurs themselves, so they understand and appreciate what you're going through."

"Here's a breakdown of the type of companies angels supported in 2004: 22 percent software, 16 percent healthcare/medical, 10 percent biotech, 8 percent information technology services, 8 percent financial services, 7 percent retail and 6 percent telecommunications."

Read more here.
For more information, visit www.EvanCarmichael.com.

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