Angel Investor Guru

Angel investors are usually wealthy individuals with an eye for a special industry or niche investment areas.  But becoming an angel investor is not easy and it involves a lot of risk.  Brad Feld has some great advice to those aspiring to be angel investors, here is the abbreviated version:

1. Be promiscuous: To be a successful angel investor, you have to make a lot of investments.

2. Have a long term financial strategy: Early on I decided that I was going to write the same size initial check in every angel investment.

3. Understand the difference between 0x and 100x: I’ve had two of my angel investments return over 100x each.  Since I had a strategy of investing the same amount in each company, all I needed was one 100x to allow me to have 99 companies completely flame out and return 0 and I’d still break even.

4. Choose people over ideas: I have never regretted making new friends through an angel investment that failed.

5. Decide quickly: My best investments as an angel were made after one meeting and I’ve often committed in the meeting.

6. Don’t torture entrepreneurs: Remember, you are supposed to be an “angel investor”, not a “devil investor.”

7. Run in a pack: The best angels run in packs.  They share deals.  They love to work together.  They don’t feel obligated to invest in each others stuff, but they often do.  And they communicate with each other.   Source

What Is an Angel Investor

Answering the Question What Is an Angel Investor?

Angel investors have been around for many years but experienced business-savvy angel investors are a relatively new phenomenon and some are wondering: what is an angel investor?

An angel investor is a person that provides seed money to young businesses and for launching startups.  The capital committment is usually tied to some element of control or advising to the company.  Angel investors are often retired, wealthy individuals with business experience or have spent years within a specific industry.  The angel investor will draw from that experience to help grow the business while making a profit from it.

Angel investors will charge a fee–often 1-2% fee and 10-20% of whatever profits.  The investor understands that many business ventures do not succeed but the hope is that one of these ventures will blossom into a success and the angel investor will receive a high return for his stake in the company.