Part three in a series that will focus specifically on an Angel Investors.
I’m often pulled aside by first time entrepreneurs who are trying to raise capital, specifically, through angel investors. As the conversation progresses, I inevitably hear, “how many types of angel investors are there?” There are quite a few types of angel investors and these are the ones you’re most likely to run into.
Most common types of angel investors
They’re not retired by any means – they own and operated their own successful business and aren’t shy about investing. Anywhere from $200,000 to $500,000 is their average and there’s a good chance they’ll re-invest in your business as it grows. The entrepreneur angel enjoys helping other entrepreneurs but is too busy to want an active role in your company.
The Tech Hunter
As the name implies, they’re always searching for the latest trends in technology and invest in high-tech companies. They enjoy the thrill of the risk and aren’t generally too interested in running your business. For many, the emotional payoff is being an instrumental part of developing and introducing new technology to the world.
This angel is usually retired after a successful business career. They’re wealthy and while ROI is always important, it’s not their primary incentive. They want to give back by mentoring another generation of entrepreneurs. They can provide valuable management advice and important contacts and their experience can add a lot of value to your company.
They’re older, retired and wealthy. They’re typically not big investors (between $10,000 to a few hundred thousand dollars) and tend to invest in multiple businesses. As the name implies, it’s more of a hobby and they’re not likely to want an active role in your company.
These angels are generally doctors, lawyers, accountants, etc. They prefer to invest in a related field and may often provide their firm’s services at a discounted rate. They generally invest from $25,000 to $200,000 and feel more comfortable co-investing with their peers.
Family and Friends
These angels are already personally familiar with your passion, work ethic and perseverance. While all investors are looking for a return, their primary incentive is wanting to invest in YOU. The pro and con is that this is almost always an emotional and very personal decision for them. In order to preserve these relationships, great care must be taken to set realistic expectation for all parties involved.
The Job Hunter
Typically an executive who’s been replaced, downsized or has been forced into an early retirement. While their investment is real, they may require a paid position as part of the deal. Depending on their experience and skill sets, this can be a win-win situation for your growing business.
This is by no means a complete list but it is a first step in understanding and recognizing the most common types of angel investors. As always, I’m commited to helping entrepreneurs so don’t hesitate to leave a commnet below or email me a question – I’d be glad to hear from you!
Until next time,
To Your Growth & Profits
William De Temple, CEO Antirion LLc
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