Next up in our Startup Speak series, we tackle the term Angel Investor. Often times you hear our last term, Venture Capital (VC), used in the same conversation with the term angel investment. VC’s and angel investors are two of the most common early stage investors. Both often lean towards investing in the biotech and medtech industries. But in general terms, that’s about where the similarities end.
Angel investors commonly will directly invest their own funds in exchange for equity in your business. Because they aren’t investing on behalf of someone else (like a venture capitalist), it makes an angel’s investment a lot more personal. Angels are generally successful business professionals or seasoned entrepreneurs that are held (or should be by you) to accredited investors standards set forth by the Securities and Exchange Commission. In general this means they have a fair amount of money, like a minimum net worth of at least $1 million, make at least $200,000 a year, or a host of other metrics.
If you raise money from an angel, be careful that they are accredited and you have fully shared the ups and possible downs of your investment.
You may have also noticed that more angels are working together under a fund as a group or network to share knowledge and resources in considering potential investments. Buffalo just started the Buffalo Angels that you can learn more about here or take a look at this list from the Angel Capital Association to find an Angel Group near you.