Last week I joined the engaging Ready2Invest webinar, offered by Droomzaken and BiD Network. Although I am familiar with the term Angel investing, I had a few questions about what makes an investor an Angel. I would hereby like to share some of the insights I gained.
Angel investors are high net worth individuals who typically invest between $ 25,000 to $ 100,000, for reasons that go beyond pure monetary return. They can provide valuable management advice and important contacts. Compared to Venture Capitalists, Angel investors invest at an early stage of a business and take higher risks (Rockies Venture Club).
According to Martijn Blom from Droomzaken, angel investing is considered to be a long process that entails a lot of commitment and involvement. His advice to aspiring angels is to view many businesses before choosing one, preferably in a sector or industry that one is acquainted with. In this selection process, it is not just the business idea that should be reviewed. More importantly, the entrepreneur and the team behind the business are evaluated. Does the entrepreneur have verifiable achievements? Is there a ‘click’ between the entrepreneur and the angel? In most cases, angels choose entrepreneurs that are within a 2 hour drive of them. Approximately 15% of the angels do not restrict themselves to geographical borders when choosing a business to invest in. A way to leverage the increasing risk when investing long distance, is to work with entrepreneurs that speak the same language.
A plan for the return of investment and an exit strategy are essential, although it does not provide any guarantees. With a success rate of 1 out of 10, angel investing is a risky business. Angels spread their chances by doing collaborative investments like joining a network of angel investors. Learning how others do it, increases the chances of success. An investment will not be made without hours of meetings, due diligence, negotiations and more. For those entrepreneurs hoping to attract angels, please keep in mind that patience is essential. Additionally, you will have to be open for others to get involved in the decision making process. Then, if you are lucky, you might see an angel fly.
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Ready2Invest Webinar by Droomzaken and BiD Network: https://attendee.gotowebinar.com/register/2695204634366584833?mc_cid=bb84c91acb&mc_eid=66b6c170cc
Peter Adams is the Executive Director of Rockies Venture Club and Co-Author of Venture Capital for Dummies, John Wiley & Sons, August 2013: http://www.rockiesventureclub.org/colorado-capital-conference/how-do-angel-investors-differ-from-venture-capitalists/