Angel Investor is an Individual, who invests at the start up stage to back an idea or back the Entrepreneur. They are typically High Net worth Individuals, Senior Executives, and Friends & Family. A new trend is emerging, where in Angel Investors are forming a Network to share related costs, meanwhile investing in their Individual Capacity
Finding an Angel
Although there are many angel investors in the country, the desire for privacy makes it difficult to identify and contact one. A number of formal sources have developed, including directories, conventions, incubators, and electronic networks for the same. In addition, professional advisors, such as attorneys, accountants, and bankers, can provide assistance in the search for private investors. The most valuable source is the entrepreneur’s own network of friends and family who can provide personal endorsement to the investor
Important Factors
The most important considerations in the angel investor’s decision are the personal characteristics of the entrepreneur and the market-product potential of the business.
One must be very thorough on the Product, its use and market potential. Prepare a rock solid business plan including details on the estimate of capital required (do not overestimate this), reasonable estimate of Revenue potential for next 3 years and cost/profit estimates.
Characteristics of Angel Investors
An entrepreneur would want someone, who is not just loaded with money, but someone who has enough experience and can be mentor to the company in reaching the next phase. He must understand and appreciate the risks involved. The investor must be patient and not always look for an exit option
Motivations behind becoming an Angel Investor.
Angel investing is highly risky and involves a lot of work. Investors are still interested because of the financial rewards and personal satisfaction it provides. It is an active form of investing (not just watching the market). According to the historical data angel investing had generated 25% annual returns on an average. Retired entrepreneur with their skills and experiences can give back to the community by helping the upcoming entrepreneurs. Most new jobs in any economy are created by small companies. It is important to understand the motivation of your angel.