Difference between revisions of "Angel Investor"

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Angel Investor

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital. [1]

Angel investors typically invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund.[2] Although typically reflecting the investment judgment of an individual, the actual entity that provides the funding may be a trust, business, limited liability company, investment fund, etc.

Angel capital fills the gap in start-up financing between "friends and family" (sometimes humorously given the acronym FFF, which stands for "friends, family and fools") who provide seed funding, and venture capital. Although it is usually difficult to raise more than a few hundred thousand dollars from friends and family, most traditional venture capital funds are usually not able to consider investments under US$1–2 million.[3] Thus, angel investment is a common second round of financing for high-growth start-ups, and accounts in total for almost as much money invested annually as all venture capital funds combined, but into more than ten times as many companies (US$26 billion vs. $30.69 billion in the US in 2007, into 57,000 companies vs. 3,918 companies).

The term "angel" originally comes from Broadway where it was used to describe wealthy individuals who provided money for theatrical productions. In 1978, William Wetzel,[3] then a professor at the University of New Hampshire and founder of its Center for Venture Research, completed a pioneering study on how entrepreneurs raised seed capital in the USA, and he began using the term "angel" to describe the investors that supported them.

An Angel Investor Might Help Your Canadian Media Project

An angel investor might help fund an entrepreneur with an idea for a Canadian media project.

Before you even think about posting your pitch on an angel website, advises Ottawa high-tech lawyer and NAO consultant Paul C. LeBarge, keep in mind that modern angels also want to keep things simple. "Have your incorporation and shareholder agreements in place. Convoluted agreements can scare angels away," he explains. "After all, they don't want to spend an inordinate amount of time trying to figure out how to protect their investment. Angels will almost always favor companies that play in their industry of expertise." Angels in the outfield

The following angel investment networks might be able to help you. Be aware. You do so at your own risk. David Spencer's Media Spin has no connection or recommendation for the following:

• B.C. Angel Forum, has been introducing pre-screened companies seeking $100,000 to $1 million in funding to potential investors at biannual "angel fairs" since 1997.

• [http://www.angelinvestmentnetwork.ca Canadian Angel Investment Network Inc
  AngelInvestmentNetwork.ca is the Kirkland, Quebec based Canadian web based portal and matching service of angel investors seeking investments, with entrepreneurs seeking capital. The site is owned by the Canadian Angel Investment Network Inc. The managing director is Dave Barnes. They created the site in response to the growing demand of Canadian angel investors to invest in things that are more tangible, predictable and closer to home. Entrepreneurs pay a one-time fee of $199 only after you choose to respond to the first angel investor who has expressed interest in your proposal and wishes to contact you. Any additional potential investors are subsequently free of charge for the rest of the one year posting period. Angel investors pay a modest fee which is a fraction of the cost of more traditional forms of capital sourcing. There is a minimal fee required to register as a qualified angel investor.This is necessary in order to limit our quality opportunities to serious investors only and also allows you to eliminate the onerous time and dollar costs of more traditional professional investment intermediaries.

• National Angel Organization is a non-profit group formed in October 2002. The chair was Henry Vehovec.

• Purple Angel -based in Ottawa comprises former Nortel execs, use a strength-in-numbers approach to evaluate potential deals, raise sufficient funds and provide well-rounded direction to a project.

Help for Angel Investors

• AngelBlog Best Practices for Angel Investors and Entrepreneurs The founding principles embedded in AngelBlog are based on a passion for entrepreneurship and a belief that alignment, governance and fairness are critically important ingredients for angel investor and entrepreneurial success. Includes "The 'One Page' Term Sheet for Angel Investors" and the article "Is Angel or VC Financing Best for Your Company?"

References

1. "Angel investor." Wikipedia, The Free Encyclopedia. 30 Nov 2009, 16:03 UTC. 19 Dec 2009 <http://en.wikipedia.org/w/index.php?title=Angel_investor&oldid=328818781>.
2. Joe Hadzima. "All Financing Sources Are Not Equal". Boston Business Journal. http://enterpriseforum.mit.edu/mindshare/startingup/financing-sources.html.
3. Handbook of Entrepreneurship Research
4. University of New Hampshire