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Angels v. Sharks
Securities and Investments
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Angel Investors
• An angel investor or angel is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.
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Venture Capitalists
• An investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to public funding.
• Venture capitalists are willing to invest in such companies because they can earn a massive return on their investments if these companies are a success.
Venture Capital
Venture capital is money invested in a business, usually a new or small business with a high potential for growth.
Businesses financed with venture capital are usually extremely risky.
The investors are considered part owners.These owners can create their own ‘fund’
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Venture Capital (continued)These funds are more risky than mutual funds
because the companies being funded are risky themselves, being new and growth-oriented.
The performance measurement for the fund is basically the internal rate of return of the money invested in the fund
Copyright © Texas Education Agency, 2013. All rights reserved.5
Copyright © Texas Education Agency, 2013. All rights reserved.
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Angels v. Sharks
• Angels (private money) invest in 55,000 startups each year versus 1,500 companies by VC (venture capital) funding.
• Last year, angel investments surpassed VC’s by $3 billion (15%).
• Angels invest in one out of every forty deals they review (2.5%) versus the one out of 400 by VC’s (0.25%) .
• There are 225,000 angels who made investments over the last two years and only 15,000 of them belong to angel groups. Furthermore, according to the IRS, about 3.9 million people qualify as accredited investors.
Copyright © Texas Education Agency, 2013. All rights reserved.
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Crowdfunding
• Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet.
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• http://www.gofundme.com/• https://www.kickstarter.com/
Copyright © Texas Education Agency, 2013. All rights reserved.
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How To Raise Money:
• 1. Write a great business plan, but know that few will read it.
• 2. ABP: Always be pitching.• 3. Be transparent.• 4. Know your numbers.• 5. Be realistic about your valuation.
