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

100 Best Green Workplaces announced

News
Wednesday, May 27, 2015
OBM-100-best-Green-logo-2015-1000pxwBY LINDA BAKER | EDITOR

More than 250 people turned out today for Oregon Business magazine’s seventh annual celebration of the 100 Best Green Companies to Work For in Oregon.


Read more...

5 stats about Oregon fireworks

The Latest
Thursday, June 18, 2015
fireworksthumb001BY JACOB PALMER | DIGITAL NEWS EDITOR

Fireworks are a booming industry, even if the pyrotechnics have turned July 4th into a day fire marshals, and many residents, love to hate.


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...

Modern design defines new Portland indoor market

The Latest
Thursday, June 25, 2015
thumbSnøhetta JBPM exterior www mir noBY KIM MOORE | RESEARCH EDITOR

An international architecture firm known for its design of the National September 11 Memorial Museum Pavilion in New York unveiled its plan this week for a modern indoor/outdoor food market at the foot of the Morrison Bridge in downtown Portland.


Read more...

100 Best Green Workplaces in Oregon

June 2015
Friday, May 22, 2015
BY KIM MOORE

As momentum grows at the state level to introduce far-reaching environmental regulations, such as carbon pricing and the Clean Fuels Program, Oregon employers continue to go the extra mile to create green workplaces for their employees.


Read more...

Credit Unions Perspective

June 2015
Tuesday, May 26, 2015
BY KIM MOORE

A conversation with Gene Pelham, CEO of Rogue Credit Union.


Read more...

The 5 highest revenue-generating parks in Oregon

The Latest
Thursday, June 11, 2015
parksthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

In 2014, total revenue for camping and day use in Oregon State Parks was a little more than $17 million. That figure may even higher this year "because we've had exceptionally nice weather," Hughes says.


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