What to Expect as an Angel Investor – Guest Post by Angel One Intern Sam Houpt
What to Expect as an Angel Investor – Sam Houpt
As an up-and-coming angel investor, you need to adopt the responsibilities of becoming a financial pillar of a new entrepreneurial business. Regardless of your reasons for choosing angel investing over other equity investments, there are some common expectations you should be planning for.
Expect to meet standards
In order to consider yourself a worthwhile angel investor, you need to be confident that you meet the criteria of accredited investor, and be positive that you reach the proper personal or personal plus spousal net worth. While your portfolio companies will do their part in the means of due diligence, you need to ensure you are doing yours by being a reliable and stable investor.
For more info on investor definitions: https://www.angelonenetwork.ca/investor-definition/
It is crucial to understand the risks that come with angel investing. As an angel investor, you can be the launch pad for an entrepreneur’s success, shaping the way for innovation and making lifelong business connections – however you should be fully prepared to not make an ROI. According to a study done by Angel Capital Association (ACA), close to 50 per cent of investors lose a portion of their contribution. A strong angel investor needs to be able to plan for these losses and take them in stride on the road to their successful and more profitable deals.
Since its inception in late 2011, Angel One has received more than 400 funding applications annually. Our members have invested over $26 million dollars in 106 transactions into 62 start-up and growth-stage companies, resulting, to date, in 5 successful exits, delivering over 50% blended annualized ROI to the investing members.
Expect to wait
One of the most important expectations is that of waiting. ACA’s study states the average active angel is expected to receive 2.6 times their investment in three and a half years. Although the dividends can exceed other private equity investments, an angel investor should accept that time is going to be a factor in any angel-related business strategy and to plan accordingly.
Angel investors who predict and adapt grow to learn from their mistakes to become smarter and more influential investors. With the proper mindset and planning, any savvy angel seeking a positive investment experience will never leave empty-handed.
For more information about angel investing, or to discover if angel investing is right for you, consider attending one of our Angel Investing 101 seminars. You’ll learn about angel investing fundamentals and more. There will be a formal presentation and plenty of time set aside to answer questions in a friendly peer-to-peer atmosphere. To register visit our Upcoming Events page.
Wiltbank, Robert. Boeker, Warren. “Returns to Angel Investors in Groups” https://www.angelcapitalassociation.org/data/Documents/Resources/AngelGroupResarch/1d – Resources – Research/6 RSCH_-_ACEF_-_Returns_to_Angel_Investor_in_Groups.pdf