Angel investors, just locating one is half the battle
It is estimated that one-seventh of the start/early growth firms in the US receive funding from angel investors. This private investment group exceeds venture capital sources which are estimated at $5 – $7 billion spread over 1,000 venture investments each year. Angel investors typically require a very high rate of return to compensate for the amount of risk they take on when funding early stage and start-up companies.
Unlike venture capitalists, angel investors typically do not want a large amount of control in the companies they invest in. Angel investors are willing to wait longer for return on their investments than a venture capitalist would and they also are willing to fund investments well under 500,000 which is the minimum amount of funding that venture capitalist provide. Angel investors are a smart option to consider for a small to medium size business in need funding without giving up too much stake in the company.
Profile of an Angel Investor
- Prefers to invest within one day of travel
- Typically well educated
- Tends to invest in a group
- Range of investment: $10,000 – $1,000,000
- Average investment – $10,000 – $250,000
- Makes one investment every two years