What an Angel Investor is Looking for in a Startup

The term “business angel” is thought to have its origins in New York’s Broadway musical scene. Producers who wanted to launch a new show would receive investment funding from wealthy “up- town” patrons of the theatre who would come “down-town” like angels to invest in these risky ventures.
Today business angels are a major source of venture capital financing that helps to fill a gap that lies between the start-up and seed capital stage (i.e. typically less than $25,000), and the point at which formal venture capital funds will take an interest (i.e. typically above $3 million to $5 million).

The definition of “business angel” remains unclear, with the terms “business angel”, “informal investor” and “informal venture capital” all used interchangeably. In an interesting paper on business angels published in the journal “Strategic Change” in 2009, Veland Ramadani notes that companies such as Bell Telephone, Ford Motor Corporation, Apple Computers, Body Shop and Amazon all had business angel funding in their early years. The typical profile of a business angel is a middle aged male with an above average education and a professional or business career background. Most have experience either in running their own companies or managing businesses and organisations. They also have high personal net worth.
Angel Investors today have many choices and each part of the angel investment process is an opportunity to assess the capability of the entrepreneur. Many small businesses have failed simply because they were undercapitalised. Asking too little could negatively impact the operation of the business, which the angel investor may view as your inability to manage effectively.

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