2015 NACO Angel of the Year – Mike Cegelski Mike founded Beltron Technologies, a telecom test-engineering consulting firm with over 130 employees. He was CEO from 1984 to 2000, when he made a successful exit. Mike has invested in more than 30 companies and is an Angel investor and board member of Anges Québec, Quebec’s Angel investment association. Describing his motivation, Mike says, “I’m an entrepreneur. Success didn’t come easily, and I want to give back and help. I’m having fun doing it. I have a lot to give back, since I’ve been there and done that. You invest your money but you also invest your time. Your time is more important.” 1.2 Personal Capital Budget Available to Invest This amount should be selected in consultation with your financial advisor, spouse and heirs. The general opinion, especially for economic investors, is that no more than 10–15% of your total investment portfolio should be available for Angel investing. Another approach would be to first ensure that all your family needs are satisfied with secure investments, and then make the remainder available for Angel investing. (Example: Once you have set aside, say, $20 million to fill all your needs, it doesn’t matter if your Angel investments are $2 million or $50 million.)
% of Total Assets in Angel Investments
1–4% 5–9% 10–14% 15–24% 25–50% Over 50%
7% 18% 25% 21% 19% 9%
% of Angel Investors
In reality, only half of all Angels actually invest less than 15% of their total net worth. A study by Freear, et al., found that 19% of their sampling of Angels invest between 25% and 50% of their total net worth in Angel investments. You should account for the fact that Angels usually need to hold on to their investments for three to eight years. Some Angels in certain sectors hold for even longer periods. For example, Jim Estill, a Super Angel from Waterloo, found that his 150-plus investments had an average hold of 14 years prior to exit. These investments are very non-liquid. You need to ensure that you retain sufficient personal liquid capital assets in case of emergencies. If you have annual personal income, you should also estimate how your capital budget might change with time. For example, you might start by setting aside $200,000 but then add $50,000 per year so your portfolio target budget is $500,000 over six years. Don’t allow yourself to get caught up in the excitement of the deal and don’t allow the amount you invest to be unduly influenced by how much money other people are investing in a deal. Set your limits and stick to them!
22 A Practical Guide to Angel Investing
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