Finance NYC - The Team

Angel Investors

Returns higher than traditional investments is the goal for angel investors. These are typically successful entrepreneurs who want to help other business owners get their business off the ground. Usually, these investors are the bridge from the self-funded, or "friends & family", stage of the business to the time that venture funding would be sought. Funding estimates vary, but usually range from $150,000 to $1.5 million. There are about two million people in the United States with the discretionary net worth to make angel investments.

The Center for Venture Research at the University of New Hampshire which does research on angel investments has developed the following profile of angel investors:

The "average" private investor is 47 years old with an annual income of $90,000, a net worth of $750,000, is college educated, has been self employed and invests $37,000 per venture.
Most angels invest close to home - 7 out of 10 investments are made within 50 miles of the investor's home or office.
Informal investment appears to be the largest source of external equity capital for small businesses. Nine out of 10 investments are devoted to small, mostly start-up firms with fewer than 20 employees.
Nine out of 10 investors provide personal loans or loan guarantees to the firms they invest in. On average, this increase the available capital by 57%.Nine out of 10 investors provide personal loans or loan guarantees to the firms they invest in. On average, this increase the available capital by 57%.
Investors expect an average 26% annual return at the time they invest, and they believe that about one-third of their investments are likely to result in a substantial capital loss.
Investors accept an average of 3 deals for every 10 considered. The most common reasons given for rejecting a deal are insufficient growth potential, overpriced equity, lack of sufficient talent of the management, or lack of information about the entrepreneur or key personnel.
There appears to be no shortage of informal capital funds. Investors included in the study would have invested almost 35% more than they did if acceptable opportunities had been available.

For the business seeking funding, the right angel investor can be the perfect first step in formal funding. It usually takes less time to meet with an angel and to receive funds, due diligence is less involved and angels usually expect a lower rate of return than a venture capitalist. The downside is finding the right balance of expert help without the angel totally taking charge of the business. Structuring the relationship carefully is an important step in the process.

FinanceNYC, LLC
48 Wall Street, Suite 1100
New York, NY 10005
Tel: 212 918-4521
Fax: 646-349-1011