About Angel Private Equity
Angel investors are a vital part of the economy. They help start-up and early stage companies develop to a point where:
- Institutional venture capital or strategic investor funds may provide larger sums to enable growth.
- Debt financing can be obtained from banks and other conventional lenders in support of growth.
- A profitable liquidity event can occur through company sale or initial public offering.
Angels provide initial external funding and advice in exchange for part ownership of entrepreneurs’ dreams. The intellectual capital angels provide can be as important as the financial capital they provide.
Often angels form groups, which can be loosely or highly organized.
Funds invested in the U.S. by angel investors approximate total funds invested by professional venture capital funds.
There are currently about 2.5 million angels in the U.S., about 400,000 of whom are active in their portfolio companies. Angels invest in about 65,000 ventures annually with about 80% of that money going to startups at the seed stage. In contrast venture capital funds are responsible for less than 1% of the seed capital deals completed each year.
Angels take higher risks and invest at earlier stages than venture capital funds. In return they hope to reap larger returns.
Want more information about angel investing? Here are some of many good sources:
- Center for Venture Research, University of New Hampshire
- Angel Capital Association
- “The Guide for Venture Investing Angels (Financing and Investing in Private Companies)”; Arthur Lipper III; Missouri Innovation Center, Inc.
- “Angel Financing (How to Find and Invest in Private Equity)”; Gerald A. Benjamin and Joel B. Margulis; John Wiley & Sons
- “Cutting Edge Practices in American Angel Investing”; Darden Graduate School of Business Administration; University of Virginia
- “Attracting Capital from Angels”, John Wiley & Sons
- “Every Business Needs an Angel”; John May & Cal Simmons; Crown Publishing Group
- The Kauffman Foundation
- “Fool’s Gold?; The Truth Behind Angel Investing in America”; Scott Shane; Oxford University Press