Home Archives July 2006 Entrepreneurship: How to tap into angel investing

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

A Good Leap Forward

September 2014
Wednesday, August 27, 2014
BY AMY MILSHTEIN

Agriculture businesses ramp up to meet international demand as workforce and succession challenges loom.


Read more...

Tight and Loose

September 2014
Wednesday, August 27, 2014
BY JENNIFER MARGULIS

As schools implement more rigorous academic standards, holistic and flexible approaches to K-12 education flourish.


Read more...

Innovation: a critique

News
Wednesday, October 08, 2014
1008 innovation thumbBY LINDA BAKER | OB EDITOR

A Design Week panel discussion raises questions about how innovative we really are.


Read more...

Grape Expectations

October 2014
Thursday, September 25, 2014
BY HANNAH WALLACE

Well-financed outsiders from France and California are buying up vineyards and wineries in the Willamette Valley.


Read more...

Podcast: Testing for Emotional Intelligence with John Hersey

Contributed Blogs
Friday, September 19, 2014
ivbU3sIXBY TOM COX | OB BLOGGER

How can you tell if you, a peer, a subordinate or a job candidate has the emotional intelligence needed to do well?


Read more...

Buyer's Remorse

September 2014
Tuesday, August 26, 2014

Parents and students paying for college today are like homeowners who bought a house just before the housing bubble burst.


Read more...

Downtime

September 2014
Wednesday, August 27, 2014
BY JESSICA RIDGWAY

How State Representative Julie Parrish (House District 37) balances life between work and play.


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