What Is An Angel Investor?

Copyright 2006 David Rapp Ventures

If you're thinking of starting business, you may want to consider equity financing from private investors. You may have heard the term angel investor before. So who are these angels?

Private investors or "angels" are usually affluent individuals who invest money, time or ideas in ventures with hopes of above average returns. The return on investment or (roi) for this type of investment is generally substantially higher than that of traditional investment strategies, such as stocks or bonds.The other aspect of making these types of investments is the feeling of personal pride and satisfaction one feels from doing something worthwhile and meaningful. Let's face it; if you had the opportunity to earn a 9% roi investing in the stock market or a 400% roi investing in a start up company that makes products that save lives, which would you chose? This may seem like an obvious answer to most, but to actually commit to an investment of this kind takes a special kind of person. It takes an angel. Most of the private investors out there have been in the same shoes that you are in right now. They were full of great ideas and had boatloads of potential, but no capital to launch their ideas with, until someone helped get their foot in the door. Perhaps some of these entrepreneurs are looking to be mentors, just like they had when they first started out.

So who are these angels and where do you get one? The answer is that they're all around you and you probably don't even know it.

Private investors took hard hits in the late 90's with many privately funded internet companies folding. Most of these investors were relatively unsophisticated, investing in start ups with no solid business model or real assets. When the bubble burst, it went fast, and investors lost billions. This scenario could have been avoided by both the start ups and the investors doing a little homework first. Consequently, the angels still making investments tend to be the more sophisticated, weary type. What are we getting at with all this? If you don't have a solid idea, proper credentials, the right team and the strength and determination to accept rejection; then stop reading this now. The journey you are about to embark upon is a long arduous one. But, if you are strong enough to persevere, the rewards will be greater than any setback you encounter. The satisfaction you receive from taking a company from nothing, raising capital for it and making it a success is immeasurable.


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David Rapp is an expert on obtaining financing from angel investors. He runs a website http://www.capitalhelpers.com where entrepreneurs can find resources about raising capital from private investors.
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