Angels are often retired executives or other professionals or, in many cases, they are “cashed-out” former entrepreneurs who ran and then sold their own companies. Most of their money goes into stable investments in real estate, public stock markets, and bonds and other investment asset categories managed by professional financial advisors. Some gets spent on their bucket lists – sports cars, cottages, dream homes, yachts, or nice long vacations to a tropical paradise. But then what? What Will You Do with the Next 20-Plus Years of Your Life? For most Angels, the answer is “I want to continue to do what I love but without the daily stress of running a company. I want to be involved in strategy, important deals and major decisions. I want to lend my expertise but I don’t want a job,” or, “I want to help other entrepreneurs learn from my mistakes but I want a share in the upside for my time.” If you are looking for the stories of individual Angels, Josh Maher’s book, Startup Wealth , provides interviews with 23 US Angels who give their personal reasons for becoming an Angel, and what they have learned about Angel investing over the years.
The term “angel” was initially coined for wealthy people who donated, loaned or invested in Broadway theatre productions. They were often thought of as patrons of the arts who invested because of their love of the theatre. Similarly, business Angels invest because of their love of business.
Angels invest for many reasons, including: • Potential for significant financial returns • Excitement of being involved in an interesting company or industry • Mentorship with the entrepreneur • “Paying it forward” by sharing their expertise with those who need it • Contributing to the economic growth of their region or country • Giving back to the community • Enjoying the social aspects of networking with other Angels
Hopes and Dreams Being an Angel is like being a grandparent. You get all the joys of being a parent/entrepreneur but you don’t have the stress of changing diapers, paying for university, firing employees or meeting payroll.
Aside from personal reasons for investing, we know, for example, that the median US Angel is 57 years old and has 14.5 years of entrepreneurial experience founding 2.7 ventures. He (86% are male) invests no more than 10% of his net worth and has made 10 investments over nine years with two exits or closures. 99% have college degrees and over half have graduate degrees. (Wiltbank & Boeker)
10 A Practical Guide to Angel Investing: How to Achieve Good Returns
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