Tag Archives: venture capitalists

Update on Angel Investors

Angel investors are often one of the first things an entrepreneur thinks about when beginning their search for money to start their business.

Unfortunately, this can be a daunting task.

Today, Angel investors can be divided into two general groups:

  1. The first group of Angels makes larger investments, primarily in high-tech enterprises nationwide. These are often referred to as “Super Angels.”
  2. The second group of Angels makes smaller (and earlier) investments in local startups. They are likely to be successful business people living in your hometown.

For the first group of Angel investors, the Angel Resource Institute recently released its annual “Halo Report,” which is a survey of Angel investments over the past year—2012.

The “Halo Report” presents the results of a survey of 738 deals totaling $1.1 Billion during 2012. Following are the highlights of this survey data:

  • Internet, Healthcare, Mobile & Telecom, and Electronics made up 70% of the deals.
  • Most common investment size in 2012 was $600,000 ($690,000 ave. for 4th quarter).
  • 63% of recipients were already producing revenue.
  • Co-investment (multiple Angels investing in same deal) deals were most prevalent in this first group of Angels with 70% of all deals being made by multiple investors.
  • Median investment with multiple investors was $1.5 Million.
  • Over the past two years, the value of companies receiving investments from this first group of Angel investors has averaged $2.5 Million.

Obviously, this first group of Angels is only interested in the high-tech, high potential profit companies that are already established and either already producing revenue, or are about to.

Most of the vast majority of the 6+ million new business startups this year do not fall into this high-return-on-investment requirement and must look elsewhere for their startup money.

There are a variety of alternative sources of startup financing available, but if you are interested primarily in Angel Investors, you will need to look much closer to home … for Angels in the second group of investors.

I would suggest that you do this search for your investors through your Advisor Group, banker, attorney, accountant, or business network.

There are many qualified Angel Investors in every city and town around the country—all you have to do is find out who they are … and then make your very best presentation to anyone you contact.

Just keep in mind that if all the investments by Angel Investors and Venture Capitalists were added together each year … the total would barely make a dent in the total startup money required by the 6+ million new full-time businesses that start up each year.

There are many ways to finance a new small business besides Angel Investors and VCs … it just takes a little digging to find them. You can get some help here.

How many of you have used either Angel Investors, or some alternative form of investment (equity) capital to start your business?