Angel Investors - Who Are They?
- Bridge the love money / venture capital funding gap.
- Can provide both money and management expertise.
- Invest in 60% of startup companies.
- Invest 5 times more money than venture capitalists.
- Are successful entrepreneurs and professionals.
- Have an average annual income of $100-250k.
- Work through informal networks of business associates and professionals (lawyers, accountants, brokers)
- Are known for being private, independent and even reclusive.
Angel Investors - What They Look For - They have related experience and industry contacts.
- You have a good story, honesty, and a passion for the business.
- They want to live vicariously through you / relive past glory.
- They like you and want to help.
- You are a close distance from them (in the same city).
- You have a solid business plan.
Angel Investors - What To Do - Lose your ego.
- Ask for help, not money.
- Get them involved, show them, let them get hands on instead of just reading a business plan.
- Listen, don’t sermon.
- Respect their money.
- Respect their time.
Angel Investors - Where To Find Angels - Informal networks (Accountants, lawyers, business associates etc.)
- 6 degrees of separation - $100-250k income individuals - Retired professionals / entrepreneurs - Angel groups Angel Investors - Why Angels Say No - Angel and entrepreneur have different values, no trust - Entrepreneur shows resistance to due diligence and defensive responses - Entrepreneur has a passion for technology over flexibility - Entrepreneur has poor knowledge of market, competitors - Angel does not have ability to work with team - Entrepreneur has "shopped the deal" and seen too many potential investors Angel Investors - Investment Amounts - Averages between $50,000 and $250,000.
- Below $50,000 is usually "love money" - friends and family.
- Above $250,000 is usually groups of angel investors or venture capitalists.
- They typically see themselves as a stepping stone to further financing.
- Their due diligence is usually between 6 and 8 weeks.
- Angels see an average of 8 to 10 potential investments per year.
- They will make between 2 and 3 investments per year.
- The Rule of 10 is that for every 10 investments an angel makes, 2 or 3 will be successful, 3 or 4 will fail, and the rest will struggle along.
How To Find An Angel Investor - To learn more about this author, visit Evan Carmichael's Website.
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