The new Initiative is a regional partnership to catalyze economic growth by raising awareness of the importance of angel investing and enhancing access to early-stage funding for tech startups.
Curious of what an Angel Investor is?
An Angel is an individual who invests his or her own money in startup companies in exchange for an equity share of the businesses. An individual Angel may invest as little as $5,000 in a business while an angel group may pool their capital to make a much larger investment. In addition to capital, Angels often invest time in entrepreneurs to help them grow their businesses. Return on investment is made when the entrepreneur successfully grows the business and exits it, generally through a sale or merger.
Why are people intrigued by being Angel Investors?
Each Angel is motivated by a different set of factors. Some of the typical reasons why Angels choose to invest are:- The idea of helping entrepreneurs with their skills and expertise
- Giving back to the local community
- Use this opportunity as an active form of investing
- Generate return on investment
What Do You Need to Have to be an Angel Investor?
The U.S. Securities and Exchange Commission has established “accredited investor” criteria to help ensure that angels who are sophisticated investors, have access to resources needed to perform due diligence, and can afford to lose invested funds.
If you are interested in becoming an Angel Investor you must have:
- A Net Worth of $1M, or
- An Annual Personal Income of $200k, or
- A Family Income of $300k
Are you a potential angel investor interested in learning more? Get in Contact with us today!
Additional details about angel investing and opportunities for education on the topic are forthcoming, so stay tuned!
________________________________________________________________________________ . . . In the meantime, you can read this
About Angel Investors
By Richard Harroch
Source: https://www.forbes.com
Angel investors invest in early stage or start-up companies in exchange for an equity ownership interest. Angel investing in start-ups has been accelerating. High-profile success stories like Uber, WhatsApp, and Facebook have spurred angel investors to make multiple bets with the hopes of getting outsized returns.
Here are my thoughts on frequently asked questions from entrepreneurs about angel financing.
1. How much do angel investors invest in a company?
The typical angel investment is $25,000 to $100,000 a company, but can go higher.
2. What are the six most important things for angel investors?
Here is what angels particularly care about:
- The quality, passion, commitment, and integrity of the founders.
- The market opportunity being addressed and the potential for the company to become very big.
- A clearly thought out business plan, and any early evidence of obtaining traction toward the plan.
- Interesting technology or intellectual property.
- An appropriate valuation with reasonable terms.
- The viability of raising additional rounds of financing if progress is made.
3. What do angel investors like to initially see from an entrepreneur?
It's my rule of thumb that it will always take longer to raise angel financing than you expect, and it will be more difficult than you had hoped. Not only do you have to find the right investors who are interested in your sector, but you have to go through meetings, due diligence, negotiations on terms, and more. Raising capital can be a very time-consuming process.
5. What financial questions should the entrepreneur anticipate from angel investors?
The angel investor will want to get a sense of how the company plans to market itself, the cost of acquiring a customer, and the long-term value of a customer. So the entrepreneur should be prepared for the following:
It's very risky, and an angel will only invest if he or she is comfortable with potentially losing all of his or her investment. At best, only one in ten startups are successful.
9. How can you find angel investors?
The use of LinkedIn to ascertain connections can prove useful.
- A clearly articulated elevator pitch for the business.
- An executive summary or pitch deck.
- A prototype or working model of the proposed product or service (or at least renditions).
- Early adopters or customers.
It's my rule of thumb that it will always take longer to raise angel financing than you expect, and it will be more difficult than you had hoped. Not only do you have to find the right investors who are interested in your sector, but you have to go through meetings, due diligence, negotiations on terms, and more. Raising capital can be a very time-consuming process.
5. What financial questions should the entrepreneur anticipate from angel investors?
- How much capital are you raising?
- How long will that capital last?
- What will be your monthly burn rate?
- Do you have detailed financial projections for the next two years?
- What are the key assumptions underlying your projections?
- What key cost components are there for the product or service?
- What are the unit economics?
- What are the likely gross margins?
The angel investor will want to get a sense of how the company plans to market itself, the cost of acquiring a customer, and the long-term value of a customer. So the entrepreneur should be prepared for the following:
- How does the company market or plan to market its products or services?
- What is the company’s PR strategy?
- What is the company’s social media strategy?
- What is the cost of a customer acquisition?
- What is the projected lifetime value of a customer?
- What advertising will you be doing?
- What is the typical sales cycle between initial customer contact and closing of a sale?
- Who are the founders and key team members?
- What relevant domain experience does the team have?
- What key additions to the team are needed in the short term?
- Why is the team uniquely capable to execute the company’s business plan?
- How many employees do you have?
- What motivates the founders?
- How do you plan to scale the team in the next 12 months?
It's very risky, and an angel will only invest if he or she is comfortable with potentially losing all of his or her investment. At best, only one in ten startups are successful.
9. How can you find angel investors?
There are a variety of ways to find angel investors, including through:
- Entrepreneurs
- Lawyers and accountants
- AngelList
- Angel investor networks (groups that aggregate individual investors)
- Venture capitalists and investment bankers
- Crowdfunding sites like Kickstarter and Indiegogo
The use of LinkedIn to ascertain connections can prove useful.
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