Entrepreneurship: How to tap into angel investing

| Print |  Email
Saturday, July 01, 2006

Angel investors are typically high net worth individuals and “cashed out” entrepreneurs who are interested in mentoring other entrepreneurs and sometimes get actively engaged in the businesses they back. The Center for Venture Research, at the University of New Hampshire, estimates that angels pump $25 billion into tens of thousands of startups annually.

In the past, angels have typically operated solo. But in a trend that is gaining momentum nationwide, angels are forming groups in order to pool resources and expertise, generate investment ideas and create a formal screening process to pinpoint the most promising prospects.

Here are tips about finding and approaching angels, from the Angel Capital Education Foundation:

1. Angels are not venture capitalists (VC). Angels invest their own personal funds in a business. VC money usually comes from institutional sources. Angels also back startup and early-stage businesses, while venture capitalists prefer later-stage companies. Individual angels invest $5,000 to $100,000, while VC investments go $2 million and up.

2. To attract angel interest, be willing to give up some ownership or control of your business, and be able to show a significant return within three to seven years, as well as a profitable exit strategy.

3.
Seek angel funding when: a) your product is fully developed; b) you’ve already invested your own money and exhausted other alternatives (like family and friends); c) you have existing or confirmed potential customers; d) you can demonstrate that the business is likely to grow fast and can pass $10 million in revenues within three to five years.

4. Angel groups come in many forms, but generally share these traits: Members help screen firms and commit to a certain amount of investments yearly. Groups meet regularly (often monthly) to hear investor presentations. Member angels decide individually whether to invest in a business. Members work jointly to validate plans, statements and entrepreneur backgrounds.

5. While angel group sizes vary widely, the median pooled investment per round is around $400,000. Some groups focus on specific areas, such as technology, but most are open to a variety of industry sectors, including software, medical devices, services and manufacturing.

— Daniel Kehrer, Bizbest Media

 

More Articles

6 things to know about the Amtrak Cascades route

The Latest
Friday, May 22, 2015
thumb3BY JACOB PALMER | DIGITAL NEWS EDITOR

The recent tragedy in Philadelphia has called attention to Amtrak and the nation's woefully underfunded rail service. Here are six facts about the Amtrak Cascades corridor between Eugene and Vancouver B.C. 


Read more...

The ancient fish that stops bullets

The Latest
Friday, May 08, 2015
hagfishthumbBY CHRIS NOBLE | PHOTOS BY JASON E. KAPLAN

Hagfish may not have evolved much over the last 300 million years, but their protein-heavy slime promises advances in super-materials.


Read more...

Photo Log: The 2015 100 Best Green Workplaces in Oregon

The Latest
Wednesday, May 27, 2015
greenthumbPHOTOS BY JASON E. KAPLAN

Oregon Business celebrated the 100 Best Green Workplaces with an awards luncheon yesterday at the Nines Hotel in downtown Portland.


Read more...

No Boundaries

June 2015
Friday, May 22, 2015
BY AMY MILSHTEIN

Floor plans embrace the great wide open.


Read more...

5 questions for Flywheel CEO Rakesh Mathur

The Latest
Wednesday, April 29, 2015
FW splashBY JACOB PALMER | DIGITAL NEWS EDITOR

Portland is awash in rideshare options. We ask the head of Flywheel what sets his app apart.


Read more...

Man for All Seasons

May 2015
Monday, April 27, 2015
BY LINDA BAKER

A longtime technologist and entrepreneur, Dwayne Johnson, 53, is managing partner of PDXO/GlobeThree Ventures, a strategy and business consultancy in Portland.


Read more...

Cherry Raincoat

June 2015
Tuesday, May 26, 2015
BY LINDA BAKER

Spring rains are the bane of an Oregon cherry farmer’s existence. Even a few sprinkles can crack the fruit so badly it’s not worth picking. Science to the rescue: Researchers at Oregon State University have developed a spray-on film that cuts rain-related cracking in half, potentially saving a season’s crop. The coating, patented as SureSeal, is made from natural chemicals similar to those found in the skins of cherries: cellulose, palm oil-based wax and calcium.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS