Venture Financing:

Business Angels

Types of Business Angels

Adapted from "Where to Go When The Bank Says No: Alternatives for Financing Your Business", by Evanson, D.R.

Venture Financing Funnel

Venture Financing: Key Documents

Corporate angels

These private investors use their severance or early-retirement pay from former senior management positions at large corporations to make entrepreneurial investments. Typically, they seek a new senior management job in the investment, want to be involved in one investment at a time, have about $1 million in cash, and make investments in the $200,000 range.

Entrepreneurial angels

The most active of the angel investors, they invest the largest amounts, generally $200,000 - $500,000. They tend to have been successful entrepreneurs themselves, now looking for ways to diversify their portfolio or expand their current business, rather than looking for a new job.

Enthusiast angels

Less professional than their entrepreneurial counterparts, these angels invest in firms more as a hobby now that they are in their later years. They tend to invest smaller amounts (from $10,000 to a few hundred thousand dollars) across a number of companies, but they do not actively participate in their investments.

Micromanagement angels

These angels prefer great control over their investments, often micromanaging them from a seat on the company board rather than through active participation. They may invest in as many as four companies at a time, adding value as well as money to each.

Professional angels

As investors from backgrounds in professional careers (doctors, lawyers, accountants), these angels prefer to invest in firms that offer a product or service with which they have experience, frequently offering their sector expertise to the investee firm, although they're usually not too actively involved. Generally investing in a number of firms simultaneously, they tend to invest from $25,000 to $200,000 each and prefer to co-invest with their peers.

 

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