An angel is a high net-worth individual who invests his or her own money in start-up companies in exchange for an equity share of the businesses. ACA recommends that entrepreneurs work with investors who are accredited investors (who meet requirements of the Securities and Exchange Commission) and who can add value to the company via high quality mentoring and advice.
Many angels are former entrepreneurs themselves. They make investments in order to gain a return on their money, to participate in the entrepreneurial process, and often to give back to their communities by catalyzing economic growth. Angels make a return on their investment when the entrepreneur successfully grows the business and exits it, generally through a sale or merger. The Center for Venture Research estimates that U.S. angel investors invested $24.1 billion in about 73,000 small businesses in 2014. Many of the investments were in start-up or very early-stage companies. Angels tend to invest in companies that are located near them regionally (or to co-invest in a wider geography if a local investor they know and trust is involved). - ACA
As an investor in startups or an entrepreneur seeking investments, understanding the investment process can increase your ability to be successful. In either role, you can play a critical role in the entrepreneurial ecosystem that has made this nation—and many other nations—more prosperous. You have probably heard about the risks of investing—that the vast majority of startups go out of business, leaving a lot of investors high and dry. The Kauffman Foundation, the Angel Capital Association, and the Angel Resource Institute designed this course to reflect everything they have learned from watching thousands of angel investors succeed and fail over the last fifteen years. They’ve broken down everything they’ve learned into five basic questions you have to know the answers to before making or seeking your first investment.