Question 1

How do I become an Angel investor?

Accepted Answer

Due to a change in US regulations (the Jobs Act) anyone can be an Angel investor. The requirements are that you have capital to invest in a company.

Question 2

Do I need to have a high net worth to be an Angel investor?

Accepted Answer

Generally, Angel investors tend to be high net worth individuals. This is because of the level of financial commitment required and the risks involved. It is not advised to invest money into a startup unless you can afford to occur loses.

Question 3

How much money do I invest in a startup?

Accepted Answer

This number varies, it can be as low as $20,000 with no upward limit. The amount invested should reflect the stage the startup is at, the amount of money it is making and the future potential of the business.

Question 4

What is the difference between investing in startups and growth businesses?

Accepted Answer

Startups tend to be riskier and require less capital to get off the ground. The valuation of a startup will tend to be quite low which means if it is successful investors will receive a greater return on their investment.
Growth businesses tend to be more established and require larger amounts of money to fund expansion.

Question 5

What is the difference between investing in startups and investing in stocks?

Accepted Answer

When a company goes public it is listed on the stock exchange meaning anyone can buy a share. Shareholders of a public stock are considered passive owners of the company. They have little to no say in the running of the business.
Angel investors tend to own larger amounts of the company and are generally active in the running of the business.

Question 6

What is the benefit of Angel investing?

Accepted Answer

Investing at an early stage of a company means you are investing at a lower valuation. If the company is successful, your return on investment will be significantly greater than investing at a later stage.

Question 7

Is it risky to invest in startups?

Accepted Answer

Yes, investing in startups involves risks and it should be done as part of a diversified portfolio.

Question 8

How many businesses can an angel investor invest in?

Accepted Answer

There is no limit as long as you can afford the investment and are comfortable taking the financial risk.

Question 9

How do Angel investors make money?

Accepted Answer

Generally, an Angel investor will hold their position until an exit occurs. This can be through an acquisition or an IPO. Both these options tend to give great returns to investors.

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