• Wealthy individuals / Accredited investors • Invest in high risk, early stage ventures • Reserve a portion of their total investment
portfolios to provide emerging companies with seed and startup capital through direct, private investments.
• They want a better return than they’d get in a normal investment
• Typically looking for 5-25% stake
What is an angel investor?
What Angels Want • Scalable • High gross margins • Large niche market
• Unfair competitive advantage
• Ready for customers
The Jockey or the horse?
Do you invest on the horse (=idea/business)
or the jockey (=founder/CEO)?
The Jockey
$ 1. It’s always personal
2. Angel Sweet Spot:
$150,000 – $1.5 million
3. Go to them EARLY ... but not too early
4. Most angels are ACTIVE investors
5. Angels like to make a DIFFERENCE
Angel Investing ...
It’s always personal Angels write checks out of their own accounts.
They want to connect with entrepreneurs and
their businesses, but also with people.
Founders: Be authentic,
not some PR story you've already concocted.
Angel Sweet Spot : $150,000 – $1.5 mil lion
• Up to $25,000, the choice is usually self-funding. If you don't have that much money in, many others will be uneasy about taking part.
• From $25,000 to $150,000, you're looking at friends and family, offering either common stock or convertible notes.
• The angel sweet spot is between $150,000 and $1.5 million, more often raised from a number of individuals but sometimes from a single generous and well-off person.
• In the $1.5 million to $10 million range, you're in early-stage venture capital in at least two phases, with half of the money up front and the rest paid in phases. More than this, and it's a late-stage venture fund.
Go to them EARLY.. But not too early Angels want to see early stage ideas, accept some risk, see opportunities
Founders: • Working with angels may make sense at a
particular early stage of business growth. • Going to them too early or too late will
minimize your chances of getting interest.
Venture Funding Stages Seed Money (proof of concept – Angel)
Start-up (Early-stage / Product development)
First-Round / Series A (Early sales & manufacturing funds)
Second-Round / Series B (Working capital, not turning profit)
Third-round / Series B or C (Expansion, turning profit)
Fourth-round (Finance the “going public” phase)
Stage 0: Friends, Family, and Fools
Stage Final: IPO or sale of entire company to a bigger company
Most angels are AC T IVE investors
Focus on YOU! Magnificent YOU!
Angles contribute their time and experience
Angels offer introductions to valuable contacts essential to the company's success.
Founders: Better 20% of something HUGE than
100% of something small
Angels like to make a DIF FERENCE
Angels typically don't make money from their investments. They go into deals knowing they might loose it all.
Angels are OPTIMISTIC and want to make a difference.
1/3 or sometimes 1/10 of early stage investments are hits,
meaning they return five times the investment or more.
Founders: Be clear with angels about the risks, threats and obstacles
your company might encounter and how you plan to mitigate them