Angel Investing: Matching Startup Funds with Startup Companies

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They deliver more capital to entrepreneurs than any other source. And they often receive an incredible return on their investments. They’re angel investors, some of the most important–and least understood–players in business today. The United States has close to three million angels, whose investments in startups exceed $60 billion per year. Some of our most successful companies were funded by angels–companies like Ford, AOL, and Amazon.com. But until now, little has been written about these angels, due in part to their preference for anonymity. Angel Investors provides an inside look at who these angels are and how they operate. It also shows would-be angels and entrepreneurs how best to find each other.

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How To Become A Business Angel

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Becoming a successful angel Angel investors are the most important source of capital for UK companies seeking up to £2 million in funding. This importance to the British economy is recognised by the government, which means that attractive tax breaks are available to business angels. Added to this, helping start-up ventures with money and mentoring can be satisfying and fun. If you have considered taking advantage of these tax incentives by making angel investments, or find the idea of providing capital to entrepreneurs – and the potential financial rewards of doing so – appealing, then your starting point should be How to Become a Business Angel. Richard Hargreaves has 40 years’ experience making investments in unquoted companies and as such is well placed to guide those who are new to the area through the process. He knows what to look for in potential deals, the risk-reward structure angels should demand, the times when legal advice must be taken and the pitfalls to be wary of. In a concise, readable manner, he provides practical guidance to all aspects of investing in unquoted companies and gives numerous invaluable case studies from real-life deals so you can see how angel investments work in practice. You will learn: – Whether angel investing is right for you – How to find and assess opportunities – What investment terms angels require – How to manage investments you have made and resolve problems that arise – How to exit from investments – Lessons from real-life deals that went well, and badly, through detailed case studies If you are looking to build a portfolio of investments in unquoted companies, wish to learn more about the technical side of investment, such as share capital structures and investors’ legal rights, or wish to invest your capital in entrepreneurial ventures in the most effective for both you and the entrepreneurs, then this book is for you.

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The Angel Investor’s Handbook

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Many of today’s high-net-worth investors are turning their attention to early-stage investing in emerging companies. They know just how successful and lucrative funding a start-up venture can be. Savvy angel investors can foresee distant but potentially huge returns from pre-IPO companies. There are scores of hungry entrepreneurs in search of capital and lots of money to be invested. But, matching the right entrepreneurs with wise investors, so that both can profit, is the challenge in new enterprises.

Gerald Benjamin and Joel Margulis demonstrate that the real pitfall for potential investors is an incomplete understanding of the complexities of early-stage investing. At the same time, the angel capital market offers few mechanisms for bringing investors and entrepreneurs together, while securities regulations restrict communication between sophisticated investors and promising new businesses.

So, where do the uninitiated start, and how do they separate the wheat from the chaff? In this ground breaking work, Benjamin and Margulis offer angel investors a hands-on manual for profiting from early-stage, private equity deals. They show how to develop investment criteria and overall game plans, locate viable investment opportunities, assess and manage risks, negotiate the most favorable deal terms, conduct thorough due diligence, and plan the all-important exit strategy.

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Rejected investment opportunities

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  • Titel:
    Austrian business angels and rejected investment opportunities. A Theoretical and Empirical Study.
  • Author: Julia Inquart
  • Date: 02/2015
  • Language: English
  • Type: Master Thesis
  • Thesis Coach: Prof. Dr. Matthias Fink
  • University: Johannes Kepler University

 

Abstract/Excerpt

The aim of the master thesis is to identify and figure out possible deal breakers in the screening and the due diligence phase of angel investments. Potential obstacles are analyzed in details, which make the closing of a deal not feasible from the point of view of a business angel. The objective is the comparison of the rejection reasons at different stages in the investment process.

Institutionalization of Business Angels

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  • Titel:
    Die Institutionalisierung von Business Angels und dessen Auswirkungen auf Start-Ups im deutschsprachigen Raum
  • Author: Julian Furthlener, BA
  • Date: 12/2014
  • Language: German
  • Type: Master Thesis
  • Thesis Coach: Dr. Stefan Fink
  • University: FH Oberösterreich

 

Abstract/Excerpt
The funding of a start-up corporation often turns out to be a challenge for founders. Business angels are a possible source of funding. Those investors provide not only equity, but also know-how and a large network for the start-up-company. This master thesis analyses the effects of the institutionalisation of business angels on start-up-companies in Austria, Germany and Switzerland.


Angel funding is already analysed in the existing literature, as well as the institutionalisation of those investors. Since the effects of that institutionalisation on start-up-corporations are not investigated, empirical studies have been also conducted in this thesis, in addition to a literature research. Those points of a transaction of a business angel – investment, where possible effects of the institutionalisation could arise, have beend found in the literature research. In the empirical studies, the differences of those points – depending on the status of the business angel (independend or institutionalised), have beend investigated.


From those differences the effects on start-ups have been derived. One effect of the institutionalisation of business angels can be found in the audit of the company, which is done before the investment. The empirical research showed, that the audit of the company is done in a more detailed and accurate way by institutionalised business angels than by independend investors. Another effect of the institutionalisation of business angels concerns the exit of the investment, which is planned more accurate by institutionalised investors. The pre-definition and communication of the exit-path towards the start-up leads to an increase of pressure for the founders. Start-up-corporations can use the findings of this thesis in order to get aware of the effects, the institutionalisation of business angels has on them.