Tyler Texas Angel Network
Angel Investors

Who are Angel Investors?

Angel Investors is a term used for affluent private individuals that look for new business, new ideas and established businesses to invest in.  Angel Investors fill a real business need, providing capital that banks will not.  The terms of the investment vary from deal to deal, but in general Angel Investors invest in exchange for some amount of ownership equity or convertible debt.

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 business. ACA (Angel Capital Association) recommends that entrepreneurs work with investors who are accredited investors (who meet requirements of the Securities and Exchange Commission) and who 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.
  • It is estimated that angels invested 19 billion in more than 55,000 start-up businesses in 2008 (Source: Center for Venture Research).
  • 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.

What are Angel Groups?

In an angel group, individual angels join with other angels to invest collectively in entrepreneurial firms. Angel organizations come in many forms, but all have certain characteristics.

  • They meet regularly to review business proposals.
  • Selected entrepreneurs make presentations to the membership of the group.
  • Member angels decide whether to invest in the presenting business.
  • Angels work together to conduct due diligence to validate the plans, statements and history of the entrepreneurial firm.

Other points of interest about angel groups are:

  • The size of angel group investments in entrepreneurial firms varies widely. A survey of member organizations of our companion organization, the Angel Capital Association (ACA), found that the median investment per round per angel group in 2008 was about $277,000. Many angel groups co-invest with other angel groups, individual angels and early-stage venture capitalists to make investments of $5,000 to $2 million per round.
  • Groups invest in innovative firms in a range of industries. The most common areas are software, medical devices, telecommunications, and manufacturing.
  • While some groups focus on a specific industry area, the majority are open to a variety of areas and select those markets where some of their members have expertise.

Tyler Texas Angel Network (TTAN)
P.O. Box 6086, Tyler, TX 75711 US
Website: http://www.tylertexasangelnetwork.com
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