FAQs for Angels & Entrepreneurs
FAQs About Angel Investors
What is an angel investor?
An angel is a high net-worth individual who invests his or her own money in start-up companies in exchange for an equity share of the businesses. ACA recommends that entrepreneurs work with investors who are accredited investors (who meet requirements of the Securities and Exchange Commission) and who can add value to the company via high quality mentoring and advice. Other important things to know about angels include:
- Many angels are former entrepreneurs themselves.
- They make investments in order to gain a return on their money, to participate in the entrepreneurial process, and often to give back to their communities by catalyzing economic growth.
- Angels make a return on their investment when the entrepreneur successfully grows the business and exits it, generally through a sale or merger.
- The Center for Venture Research estimates that U.S. angel investors invested $24.6 billion in about 71,000 small businesses in 2015. Many of the investments were in start-up or very early-stage companies.
- Angels tend to invest in companies that are located near them regionally (or to co-invest in a wider geography if a local investor they know and trust is involved).
How many angel investors are there in the U.S.?
The best available estimates are that about 300,000 people have made an angel investment in the last two years. Many more people could become angels based on a net worth of $1 million or more, the potential number of angel investors is 4 million.
Is angel investing risky?
Yes. The only academic study of American angel investments found that angels lose some or all of their money in 52 percent of their investment deals because the companies go out of business. The most sophisticated angels make at least ten investments in order to make a return on their investment, counting on one or two to provide nearly all of their return.
FAQs About Entrepreneurs
What is an angel investor?
An angel is a high net-worth individual who invests his or her own money in start-up companies in exchange for an equity share of the businesses. ACA recommends that entrepreneurs work with investors who are accredited investors (who meet requirements of the Securities and Exchange Commission) and who can add value to the company via high quality mentoring and advice. Other important things to know about angels include:
- Many angels are former entrepreneurs themselves.
- They make investments in order to gain a return on their money, to participate in the entrepreneurial process, and often to give back to their communities by catalyzing economic growth.
- Angels make a return on their investment when the entrepreneur successfully grows the business and exits it, generally through a sale or merger.
- The Center for Venture Research estimates that U.S. angel investors invested $24.6 billion in about 71,000 small businesses in 2015. Many of the investments were in start-up or very early-stage companies.
- Angels tend to invest in companies that are located near them regionally (or to co-invest in a wider geography if a local investor they know and trust is involved).
How many angel investors are there in the U.S.?
The best available estimates are that about 300,000 people have made an angel investment in the last two years. Many more people could become angels based on a net worth of $1 million or more, the potential number of angel investors is 4 million.
Is angel investing risky?
Yes. The only academic study of American angel investments found that angels lose some or all of their money in 52 percent of their investment deals because the companies go out of business. The most sophisticated angels make at least ten investments in order to make a return on their investment, counting on one or two to provide nearly all of their return.