What is Angel Investing and How to Start?

posted in: Investing | 12

Angel investing is where a group of wealthy people come together and invest in startups, and they are known as Angel Investors or sometimes called private investors. These are people who often infuse an entrepreneur or a startup company with capital in exchange for some equity or ownership of the investment.

Angel investors include professionals, former business associates, and seasoned entrepreneurs. They also include the likes of doctors and lawyers. And they are wealthy people willing to invest in the business for help the next generations as well as have a piece of the action in that investment.

HOW TO START ANGEL INVESTING?

I’ll take you through the steps on how to start angel investing and become an investor yourself.

  • YOU MUST MEET ACCREDITED INVESTOR STANDARDS

If you want to become an angel investor, then you must be an individual with a net worth of about $1 million or an annual income of at least $200,000. Also, note that your primary home is not considered in the net worth calculations. Why do you need to meet these standards? It’s because the company you need to become an angel investor for must be exempted from all securities filings with the state security fillings and Securities and Exchange Commission (SEC). Once you meet the investor standards, then you can become an angel investor.

  • KNOW THE RISKS AND EDUCATE YOURSELF

In any investment, the first thing to do is to understand the risks involved in that venture. The same case applies to angel investing, and it can be rewarding, but it’s hazardous. According to resources, it’s likely for an angel investor to lose either some of their money or even all of it. Also, the same resources indicate that you can make a lot of profits in return. Consult yourself and see whether you’re willing to take risks in this investment.

After knowing the risks, you need to educate yourself on angel investing in developing as well as grow your angel skills. You can visit sites with angel investing advice as well as events and workshops to meet other entrepreneurs and learn more about angel investing.

  • GET ADVICE FROM EXPERIENCE ANGELS OR JOIN AN ANGEL GROUP/PLATFORM

If you want to become a successful investor, then you need to consult other experienced angels and ask them questions about the best techniques to follow to become an angel. Also, you can join angel groups, networks, clubs, funds as well as platforms to learn about the best practices in angel investing to increase the chances of success.

  • PARTICIPATE IN Q&AS AND HAVE AN INVESTING STRATEGY

After enrolling in an angel group or platforms, you need to actively participate in the meetings to have a feel of the experience and learn more about the investment. By engaging in the Q&As meetings, you’re going to remove the anxiety and fear when it comes to taking the first step in angel investing.  With that in mind, you should have an investment strategy that includes things like the kind of deals to make, the number of investments to make, and lastly, why you want to become an angel investor.

  • CLOSE THE DEAL

After going through all the above steps, it’s time for you write the first check. It’s after you have already assessed the risks involved and the profits to get.

CONCLUSION

If you think the deal is right and you’re willing to take any risks involved, then you should invest and become an angel investor.

 

12 Responses

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