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Mergers, Acquisitions & Investment Banking for Mid-Market Business Owners
Secure An Angel Investor

An Angel Investor or "Angel" (known as a "business Angel" in Europe), is an affluent individual who provides capital for a business start-up, usually in exchange for ownership equity. Angels typically invest their own funds, unlike venture capitalist who manage the pooled money of others in a professionally-managed fund. A small but increasing number of Angel Investors are organizing themselves into Angel networks or Angel groups to share research and pool their investment capital.  Angel capital fills the gap in start-up financing between the "three F's" (friends, family, and fools) of seed capital, and Venture Capital. While it is usually difficult to raise more than $100K to $500K from friends and family, most traditional Venture Capital funds are usually not amenable to considering investments under $1M to $5M. Thus, Angel investment is a common first and 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 invested into more than ten times as many companies (US$25.6B vs. $26.1B in the US in 2006, into 51,000 companies vs. 3,522 companies). Of the 51,000 US companies that received Angel funding in 2006, the average raise was about $500K. Services and medical devices / equipment accounted for the largest share of Angel investments, with 21 percent of total Angel investments in 2006, followed by software (18 percent) and biotechnology (18 percent). The remaining investments were approximately equally weighted across high-tech sectors.

Angel investments bear extremely high risk, and thus require a very high return on investment. Because a large percentage of Angel investments are lost completely when early stage companies fail, professional Angel Investors seek investments that have the potential return of at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering, acquisition or divestiture. Current 'best practices' as taught by the Angel Capital Education Foundation in its 'Power of Angel Investing' seminar series suggest that Angels might do better setting their sights even higher, looking for companies that will have at least the potential to provide a 20 times to 30 times return over a five to seven-year holding period. After taking into account the need to cover failed investments and the multi-year holding time for even the successful ones.  However, the actual effective internal rate of return for a typical successful portfolio of Angel investments might, in reality, be as 'low' as 20% to 30%. While the investor's need for high rates of return on any given investment can thus make Angel financing an expensive source of funds, cheaper sources of capital, such as bank financing, are usually not available for most early-stage ventures. Banks are simply not in the risk business.  Communicate your request to us by clicking on Submit Funding / Loan Request in the right margin.  We shepherd your request from inception through fulfillment.
 
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"John Nelson made two specific recommendations while our company was in its infancy that were key to our survival, and have become the cornerstones of our success. Without him, I have no doubt we would have become another tombstone in the DotCom graveyard."
 
-John Munsell
President of Bizzuka, Inc.
 
 
 

   

 

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