Nov 10

Angel investors 1

What is an angel investor?

Angel investors are individuals who invest in businesses looking for a higher return than they would see from more traditional investments.

Many are successful entrepreneurs who want to help other entrepreneurs get their business off the ground.

Usually they are the bridge from the self-funded stage of the business, to the point that the business needs the level of funding that a venture capitalist would offer.

Funding estimates vary, but usually range from $150,000 to $1.5 million.

The term “angel” comes from the practice in the early 1900’s of wealthy businessmen investing in Broadway productions.

Today “angel investors” typically offer expertise, experience and contacts, in addition to cash. Less is known about angel investing than venture capital because of the individuality and privacy of the investments.

However, the Small Business Administration estimates that there are at least 250,000 angels active in the country, funding about 30,000 small companies a year.

The total investment from angel investors has been estimated at anywhere from $20 billion to $50 billion, as compared to the $3 to $5 billion per year that the formal venture capital community invests.

In fact, the potential pool of angel investors is substantially larger, due to the smaller size of the investments. There are approximately two million people in the United States with the discretionary net worth to make angel investments.

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