The Changing Face of Angel Investors
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Most small businesses can be financed by numerous sources, including personal funding, financial support from family and friends, and bank loans. Despite all of the capital resources available, it is a well-known fact that financial institutions make it quite difficult for new entrepreneurs to borrow money, especially since many new companies have not yet established a strong record of success. An angel investor makes it possible for young companies to obtain the needed startup capital when other traditional means of financing are not enough. Since many angel investors do not require monthly repayment terms, they can also benefit those who cannot afford monthly payments on traditional loans. Angel investors can actively help entrepreneurs who seek capital for their small businesses so their start-ups, expansions, and innovative ideas can become a reality.

Typical profile for an angel investor
The typical angel investor is a retired entrepreneur or business executive with a passion for investing. Their strong enthusiasm for the job allows them to look beyond the monetary aspects of an investment. They enjoy using their experience for the prospect of economic growth and in helping other entrepreneurs obtain success in their ventures through mentoring. They are often college educated, invest in groups (angel networks), and make an average of one investment every two years. The typical investment of an angel investor ranges from $10,000 to $250,000; however, they are known for investing up to $1.5 million dollars in any given venture.

Angel investor expectations
Unlike venture capitalists, angel investors typically do not want a large amount of control in the companies that they invest in. Instead, they desire a large return on investments throughout the course of several years. They believe that a higher rate of return will compensate for the amount of risk in a given business endeavor (at least 25% ROI), and often seek some sort of active role in managing the company. One positive aspect of angel investors is that they can provide capital for small business startups that are well under $500,000 (the minimum amount of funding that venture capitalists provide). Angel funding is definitely a clever alternative to consider for small to medium-sized businesses that seek business capital but do not want to give up too much stake in their company.

Angel investors in America
It is estimated that approximately one-seventh of all startups in the United States receive some sort of funding from angel investors. According to the Center for Venture Research, there are currently 220,000+ active angel investors in the U.S. who typically provide an average of $150,000 for each business opportunity.

It is also important to note that experienced entrepreneurs and accredited angel investors are joining together to form groups and networks. Rather than the traditional single benefactor of the 1970s, it has become increasingly common for angel investors to operate as part of an angel syndicate or confederacy (a group of angel investors). The benefit of having angel networks is that each member is able to raise their potential investment level appropriately. Angel networks are generally local organizations made up of 10 to 150 accredited investors interested in early-stage investing. In 1996, there were about 10 angel groups in the U.S. Since then, the number of angel groups has steadily increased and account for more than 250.

The advantage of angel networks
As with any business endeavor, angel investors can greatly benefit from the formation of networks. As a group, they are able to designate specific tasks to each other. A select few can examine hundreds of business plans while others can present their findings to other group members. Since each group member has a common goal of pooling their funds together, they can collaboratively make larger investments. Each member can also have the opportunity to invest in multiple business endeavors since their contribution as a single member of a group is significantly less than if they were to be the sole provider of an investment.

Many angel partnerships are willing to accept executive summaries or business plans by e-mail, while other groups prefer entrepreneurs to fill out a template on their website. If there are prospective business endeavors of interest, an angel network screening committee will select this group of businesses for further investigation. Of those choices, only a few will be invited to present before the entire angel group.

Other angel investor trends
Since angel investors have emerged in the 1980s, not only have they progressed into syndicates but they have also increased their investment amount. Angel investors typically invested anywhere from $10,000 to $150,000 per business venture. Today, each angel investment is more along the lines of $500,000 up to over $1 million, an amount that is very similar to venture capital funding. This new reality should encourage entrepreneurs to approach angel investors the same way they would approach venture capitalists.

This means that small business owners who seek angel capital should be prepared to provide a detailed presentation of their business venture's opportunities and risks. Supporting documentation, such as a summary of their business proposal, financial predictions, and background information of partners, advisors, and members of the management team, should be presented to the angel network. In addition, entrepreneurs who are able to successfully attract an angel investor’s attention should have their attorneys explain and negotiate the deal so there are no legal misunderstandings in the business arrangement.

In the past several years there have been different growing trends of angel investors. Since their solo days in the 1970s, there has been the gradual formation of angel groups in order to collectively pool resources and expertise together. There have also been more investments in the fields of technology, media and entertainment, and the rise of many women-led ventures in the United States.

In today’s technologically adept society, the Internet has made it possible for entrepreneurs to network with other investors worldwide. This once local occurrence has now reached global recognition, where many small business owners who seek funding can post their business proposals online for potential investors. Likewise, angel investors can actively search for prospective business opportunities. Websites such as can unite online communities from around the world and connect investors and entrepreneurs through profile matching and online networking.

Go4Funding is a fast and effective way of locating the capital entrepreneurs need. Entrepreneurs will be given access to thousands of potential investors around the globe, increasing their chance of raising capital for their start-up. Investors can also use this online platform to target specific business proposals. can benefit the entrepreneurs and investors by providing an online centralized network so both parties can successfully exchange ideas, advertise, and obtain online support through forums and educational materials.

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