Category: Angel Investing

04- Sep2015
Posted By: Joe Alvarez

Business ownership: A Going Concern or Start from Scratch ?

Previously we were discussing, not whether to go into business, but the decision of which method made sense for you. A chicken or egg scenario. Do you start from scratch with just an egg? An idea that has yet to hatch but holds great promise or do you purchase some chickens, a going concern that is producing revenue and , hopefully, income.

Under the egg method you must have time. Time to weather the delays of a startup; the lack of customers, employees, revenues and spendable income. In fact the reality is you will most likely go deeper in the debt hole having no personal income for many months if not years. Do you have that kind of staying power (reserves)? Investors, if you can find any, will not allow you to spend their money on your living cost. So for sake of analysis let?s examine which is better, the chicken or the egg.

Your egg has a cost obviously much less than buying a group of chickens. But it does not produce current income. Let?s say you have spent $50k on your egg (idea) so far. Even when it hatches you?ll have to build up your ?coup? of chickens letting other eggs hatch not taking income while this process build. You now have another $200k sunk into your business and / or debt from living expenses.

At $250k you could have bought a chicken farm, a revenue producing enterprise. You?d have debt but also income. You?d be buying a proven business because you did your due diligence and know the stream of revenue the business has been producing. You might have to spend a few dollars for sprucing up the business; perhaps a new marketing campaign but you have INCOME!

But my egg is a fantastic idea. Could be, I hope so. BUT 75% of all new businesses fail by or before year 3 and 85% by year 5. Risky?? You bet! Still want to be in business? Good. We?ll discuss alternative ways to make that happen while lowering the risk next.

Steve Ivey

12- Aug2015
Posted By: Joe Alvarez


Million dollar myth: Sydney Angels co-founder Hamish Hawthorn says as little as $15,000 can get you access to an angel investment opportunity, and it?s not only grey-haired men that participate.

business investments



Angel business investments are certainly a high-risk area. Half of all startups, even after good screening, due diligence and post-business investments help, will fail to return what was invested. But these losses can be more than compensated by the few that return 10-30x the initial investment. The key to making returns is to have a portfolio of enough investments to contain some of these big winners. Those who use a disciplined investment process to build portfolio can see extraordinary returns from the startup sector over time.

A large-scale study undertaken by the Kauffman Foundation and NESTA found that angel investors in the US and UK generated an average return of 2.5 times the amount invested in a mean time of four years from investment to exit, equating to a?very healthy 26% internal rate of return. “



Excerpt taken from article: ?”We?re not all retired blokes, and 4 other angel investor myths busted” by Sydney Angels co-founder Hamish Hawthorn?





23- Feb2015
Posted By: Brett Andrews

Women – next wave of Angel Investors

Women – next wave of Angel Investors

Except from the article by Alicia Robb:

“Females have historically made up less than 15% of the angel investors in the United States. The University of New Hampshire?s Center for Venture Research estimated that women angels represented 19.4% of the angel market in 2014, which was a significant increase from the 12.2% number from just two years prior. Women-owned ventures accounted for 23% of the entrepreneurs that were seeking angel capital and 19% of those entrepreneurs that received angel investment in 2013.”

Women – next wave of Angel Investors, Entrepreneur Magazine

1)????? On a macro level, the biggest impact for getting more women on the investing side is to create more women entrepreneurs. Entrepreneurs are more likely to invest in other entrepreneurs, and the risk profiles of entrepreneurs match well to investing

2)????? Highlight women investors more often. Every time she sees an opportunity to talk about angel investing, she makes sure women are speaking, which also brings more women.

3)????? Any efforts to educate people outside of the startup community about angel investing would attract both men and women, and this would bring in investors who aren?t entrepreneurs.

05- Jun2014
Posted By: Brett Andrews

Angel Investors Do Make Money, Data Shows 2.5x Returns Overall


Posted??by Robert Wiltbank, PhD

“I began studying angel investing returns about 10 years ago as a result of a problem I couldn?t resolve: The investing world seemed certain that angel investors were rubes. Conventional wisdom dictated that they made reckless investments in very early-stage ventures mostly doomed to fail. And whenever they might come close to succeeding, savvy ?professional? investors would just swoop in, cram them down, and win the real returns. In addition, angels were up against a selection problem: All the best entrepreneurs and opportunities would naturally gravitate to the best venture capital funds, leaving only the ?scraps? for angel investors.

So which is it? Are angel investors just unwitting philanthropists or legitimate entrepreneurial investors?

Through research backed by the Kauffman Foundation, NESTA (a UK-based entrepreneurship foundation), the University of Washington, and Willamette University, I?ve compiled the largest data set on angel investor financial returns that exists.?The angel investors I was spending time with didn?t seem so na?ve or incompetent. While not professional investors, most angels are very successful in their own right, overwhelmingly as a result of their own entrepreneurial endeavors. Their firsthand knowledge of creating new businesses and new markets seemed quite relevant to successfully investing in other entrepreneurs working to do the same.

The best estimate of overall angel investor returns from this data is 2.5 times their investment, though in any one investment the odds of a positive return are less than 50 percent. This is absolutely competitive with venture capital returns.”

by Robert Wiltbank, PhD


Click here if you would like to read more about Angel Investing.

22- Jan2014
Posted By: Brett Andrews

Investing in Startups has Increased Significantly Over Recent Years

RockThePost?s 2013 Investor Trends Survey reveals interesting insights into the changing investment landscape and investment
attitudes among private investors today compared to 10 years ago. Upcoming regulatory changes with the JOBS Act will further
shape the investment world, allowing investors to invest in private companies for the first time in 80 years regardless of income
or net worth. The Investor Trends Survey also identifies some key characteristics of experienced angel investors ? those who
have experience investing in startups ? compared to non-angel or novice angel investors.
This special report contains a selection of the insights from RockThePost?s 2013 Investor Trends Survey, including:
? Investor portfolios consist of 15% more alternative investments now than 10 years ago
? Experienced angel investors have a lower percentage of mutual funds in their portfolios than novice and non-angel investors
? Investors are relying less on intermediaries to carry out their investments and more on direct investing methods
? The availability of investment tools, such as online trading platforms, and investors? experience with direct investing are the
main reasons they are encouraged to manage their portfolios.

26- Nov2013
Posted By: Brett Andrews

Where Startup Capital Comes From

where start-up captial comes fromStartup Capital Sources

  • Friends and Family  $60BB
  • Venture Capital $22BB
  • Angel Investors  — $20BB
  • Banks $14BB
  • Crowd funding  $5.1BB


Where Startup Capital Comes From:

Friends and family, venture capital, Angel investors, banks, crowdfunding.



04- Nov2013
Posted By: Tim Ajayi

Are You Making These Angel-Investing Mistakes?

Angel Barbara (not her real name) listened intently as the presenter clicked through his slides and explained how and why his startup is going to revolutionize the industry and change the world.

When he finished, he asked: ?Any questions??

Angel Barbara looked around the table, flipped through the financial projections and SWOT analyses pages and proceeded to make one of the top 5 angel investor mistakes:

1. Not having a model for investing

If you don?t know what you want, everything will look inviting. We see this when angel investors evaluate an investment opportunity in a vacuum ? instead of evaluating such opportunity against a rigorously developed checklist. As an investor, you cannot Not Have a guidance system for choosing investments.

2. Treating angel investing as a hobby

Some of the most sophisticated investors focus on the private markets, also known as ?the dark? for good reasons: you have to know your onions if you?re going to invest in the next Google or Facebook. A casual, retired approach would definitely hurt in the long run.

3. Investing by the numbers

As they say on Wall Street, ?If you torture the numbers long enough, they?ll confess.? This too is true on Main Street. Entrepreneurs are optimists by nature ? a necessary requirement if you?re going to topple Google. This optimism carries over to the financial projections. Assume the numbers ? and entire business plan – are going to be wrong and discount appropriately.

Steve Blank is right: ?No business plan survives first contact with the customer.?

4. Being wimpy

I was going to write ?indecisive? but ?wimpy? captures it nicely. This is derivative of No.1 ? not knowing your preferred investment criteria. We?ve seen angels nitpick a business plan to death – as if perfection exists or guarantees a successful business. In investing, I recommend the Derek Sivers dictum: ?No more yes. It?s either HELL YEAH! Or No.? Decide.

5. Not investing enough to be worthwhile

Warren Buffet?s No.2, Charlie Munger described this thus: ?To be a master investor, bet very seldom. Work hard at finding mispriced assets. Then bet heavily when the world offers you the opportunity. Bet big when you have the odds. And the rest of the time, don?t.? When we see masterful angel investors in action, they?ve usually worked out in advance what they?re looking for, made up their minds pretty quickly about whether or not they?re interested (subject to due diligence) and took a sizeable bite out of the company. In other words, they put their eggs in very few baskets and then kept eagle eyes on them.

So, which of these mistakes was Angel Barbara about to make? Mistake No.3. She took the entrepreneur through a third degree on the numbers and projections even before determining if the opportunity met her investment criteria.

Your turn. What mistakes have you made or seen people made?