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Written by ANGEL INVESTING
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Thursday, 21 January 2010 00:14 |
Angel Investing Tips
When first considering angel investing and being an angel investor one should not delve into the world of startups alone. It is recommended to find a few partners and form a group of investors; joining a local Angel Conference or Group may also be an option. Joining an established network of angels will require you to allocate less capital to the startup, thus minimizing your risk.
Don't forget what you are passionate about once you become an angel investor. Investing in projects that are familiar to your own ventures and that have an intrinsic connection will serve you better in the long run. Warren Buffet never invests in anything that he is not educated with, it seems he did quite well so it may not be a bad piece of advice. Try to invest in a market or sector when you may have a lot of expertise, this will make the investing and seed funding a lot easier for you. Not only will you be able to invest in a project that has personal meaning to you but you will also be able to invest in something where you can give your opinions and make educated decisions.
Never invest in a startup that does not have a defined exit plan. No angel investor should consider tying up their money for an inumerable amount of time, the average investment should be between 3 - 7 years, no longer. If no exit plan is defined I would try to establish one with the entrepreneur and make sure it makes sense as well as puts you, the investor, in an offensive position.
It is important to know that angel investing is responsible for the early fundin
g (seed funding, startup capital, venture funding) once you get the ball rolling for the entrepreneur the sharks (VCs) are sure to start circling. You should try to minimize any contact with future VCs as they will eventually dilute your investment and propel the Series A financing forward. Understand that you may be responsible for providing future funding to thwart potential angel investors or venture capitalists looking to capitalize on your good fortune.
Suggested Readings:
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Last Updated on Thursday, 18 March 2010 21:26 |
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How to be an Angel Investor |
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Written by ANGEL INVESTING
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Wednesday, 20 January 2010 23:54 |
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The following essay was taken from Paul Graham's website, PaulGraham.com
March 2009
By:Paul Graham
(This essay is derived from a talk at AngelConf.)
When we sold our startup in 1998 I thought one day I'd do some angel investing. Seven years later I still hadn't started. I put it off because it seemed mysterious and complicated. It turns out to be easier than I expected, and also more interesting.
The part I thought was hard, the mechanics of investing, really isn't. You give a startup money and they give you stock. You'll probably get either preferred stock, which means stock with extra rights like getting your money back first in a sale, or convertible debt, which means (on paper) you're lending the company money, and the debt converts to stock at the next sufficiently big funding round. [1]There are sometimes minor tactical advantages to using one or the other. The paperwork for convertible debt is simpler. But really it doesn't matter much which you use. Don't spend much time worrying about the details of deal terms, especially when you first start angel investing. That's not how you win at this game. When you hear people talking about a successful angel investor, they're not saying "He got a 4x liquidation preference." They're saying "He invested in Google."
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Last Updated on Friday, 22 January 2010 12:30 |
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Written by ANGEL INVESTING
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Saturday, 07 July 2007 04:54 |
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Angel Investing is described as the issuance of capital from an Angel Investor, usually for the startup expenses and initial costs of a new business. Angel Investors, usually affluent individual investors, are not like venture capitalists or VC's because they generally do not invest in business requiring capital in excess of $100,000. Angel investing is usually accomplished by the investor providing the startup capital in exchange for partial ownership or equity in the startup company. Angel investors generally invest in business as a group and usually contribute between $25,000 to $50,000 each. Angel investors usually look for high return rewards with minimal risks, they look for projects that can provide at least a 10 to 20 times return on their investment. One of the most challenging parts for any business today is raising capital, especially in these hard economic times where money is scarce. Often times individual investors combine their capital and form a group, also known as an Angel Group, this makes it easier to allocate the capital between a number of angel investors instead of relying on one investor. The only problem with an angel group is that everyone has to be in accordance before proceeding with the initial rounds of funding; it is a lot easier to convince one person to invest in your human capital than ten.
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Last Updated on Thursday, 21 January 2010 00:01 |
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