What are angel investors?
While these folks don’t have wings, they can potentially be the answer to prayers. Angel investor refers to any individual who has a lot of money and is willing to put it towards a startup of some kind. Angel investors might contribute a continual flow of money towards a potential business or make one large investment and be done. Typically, an angel investor gives money for equity in whatever startup they’re involved with.
So, who qualifies as an angel investor?
The simple answer is someone with a lot of money. While this is not a requirement, an angel investor is often someone who has earned the status of “accredited investor.” Now, an accredited investor can be many different things, but for this article, we’re talking about an individual or individuals.
With that in mind, according to the Securities and Exchange Commission (SEC), an accredited investor is defined as follows;
“Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000,” or
“Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year…”
As stated before, someone with a lot of money.
Where can you find these angels?
Luckily, you don’t have to rely on word-of-mouth and physical networking to find an angel investor. There are plenty of online resources available to anyone who needs startup funds. A shortlist includes;
Angel Capital Association (ACA)
Each site listed above will get you started rubbing elbows with the financial elite. Take time and research who would best fit your needs.
Just a small warning
Since angel investors traditionally have controlling equity in the startup they’re supporting, they can potentially weigh in on business decisions. This can be both good and bad. On the plus side, an angel investor will most likely have business savvy that could directly benefit your vision. On the other hand, they could offer ideas you don’t agree with or monitor the startup under a magnifying glass, making it difficult to move forward without your every move being questioned.
Keep these things in mind should angel investors be a potential option for you.
