Angel Investors

Are you a high net worth individual? Maybe you’ve started and sold a company, or you’ve retired from a successful professional career.

Angel investors are wealthy (accredited) individuals that parlay their funds and their expertise into helping fledgling ventures. Angels often invest with a particular focus, such as food, technology or women-led firms. Others (impact investors) are looking to make a positive impact in the world by investing in ventures with a social mission. Unlike venture capitalists, which pool money from institutions and wealthy investors into investment funds, angels invest their own money.

As the field has grown, angels have organized into groups to share deal flow and due diligence (vetting of companies). Today there are angel networks across the country. Angels fill a critical gap between friends & family seed funding and venture capital, and typically take an equity stake, or debt that converts to equity.

Pros:

  • Angels work on the front lines of entrepreneurship, giving young companies a chance to prove themselves (they don’t call them angels for nothing!)
  • Angels are often hands-on, so it’s an opportunity to use your expertise to help young companies grow
  • As early investors, angels have an opportunity to get in on the ground floor of promising companies
  • Angels typically negotiate favorable terms, so when a company does well, the are handsomely rewarded
  • By banding together in groups, angels can share the job of vetting companies (ie. due diligence)

Cons:

  • Angels deal in risky seed capital, and many investments don’t pan out.
  • Angels must be patient: it may take years for them to see a return, even from a successful company

Resources:

The Angel Capital Association tracks networks across the country and Canada: http://www.angelcapitalassociation.org/directory/

Some angel investor groups of note:

Golden Seeds – women angels looking to invest in women-owned or led businesses. http://www.goldenseeds.com/

Investor’s Circle: A network of social impact investors that hosts regular pitch competitions.www.investorscircle.net

National Minority Angel Network – investors pursuing “the empowerment of minority, woman, and veteran entrepreneurs through education, investment and alignment to corporations who seek their business.” http://www.nmanetwork.com/

Slow Money: Capital for local, community-based sustainable food & agriculture enterprises. Great organization if you are passionate about food and farming. www.slowmoney.org