Angel investors are wealthy individuals, often retired entrepreneurs or executives, who take an interest in startup investing. They often have a particular interest, such as technology, food ventures or companies making a positive social impact. Unlike venture capitalists, which pool money from institutions and wealthy investors into investment funds, angels invest their own money. They typically take an equity stake in the company or debt that converts to equity.
Angel investors fill a critical gap between friends & family seed funding and venture capital. As the field has grown, individual angels have organized into groups to share deal flow and due diligence (the vetting of companies). Today there are angel networks across the country.
– Angel investors will tell you that they invest in people more than business models. So keep in mind, it’s about you, your passion and expertise.
– Do your homework before you approach an angel or angel group to make sure it’s a good fit.
- Angels are willing to take more risk and invest at an earlier stage than other investors, such as VCs and banks
- They typically take a hands-on approach, offering advice, mentoring and introductions that can help a young company
- Angels are often willing to take a chance on an entrepreneur who has passion and ability, but has not fully figured out her business plan
- Expect to give up some ownership, anywhere from 10% to 50% or more.
- Angels typically invest smaller amounts than venture capitalists, usually less than $1 million
- Angels want to see an exit so they can recoup their investment. That usually means an IPO or acquisition.
Angel directory: http://www.angelcapitalassociation.org/directory/
AngelList – a platform that connects startups with angel investors. Very tech-oriented. https://angel.co/
Gust – https://gust.com/ – a platform that connects startups & angel investors
MicroVentures – another site connecting startups with investors, conducts due diligence on the companies and negotiates price. (both accredited and nonaccredited (‘sohpisticated’) https://microventures.com/about