Angel investors generally have a net worth of $ 500,000 to $ 5,000,000. Typically, these private funding sources also generate an income of $ 200,000 to $ 1,000,000 per year. The demographics among these investors vary considerably, but they are all generally looking to make investments of $ 100,000 to $ 250,000 into a small business that is located within 50 miles of their home location. This article will focus on issues pertaining to working with angel investors as well as alternatives to angel investment. Almost all angel investors are considered to be accredited investors. An accredited investor is an individual that has a net worth of at least $ 1,000,000 (excluding a primary residence) and earns an income of at least $ 200,000 per year.
There is not a single business that does not face any type of specific business risk. A demographic analysis is extremely important when you are presenting to an investment group or group of private investors that have come together to make a syndicated investment. If you’re working with a small business investor then you should also inquire as to working with the small business investment companies that are licensed by this federal agency. Capital from the SBA is less expensive then equity capital, and you should make this determination when you are deciding whether or not to seek private capital.
As an alternative to working with an individual accredit investor, many small business investment companies are not directly looking to take a very large percentage of your business but rather are seeking to provide you with several different types of financing.
Many private investment firms and syndicated angel investment groups employ a number of economists that an extensive amount due diligence regarding your industry. Ultimately, when working with one of these types of firms, the amount of equity you sell is up to the quality of your business and its expected earnings. This is an especially important point to note when focusing on the net worth of a potential individual investor for your company.
You should always consider the risks involved when it comes to seeking an equity investors. Most angel investors high net worth individuals based on the standards set forth by the Securities and Exchange Commission. If you do not own a high gross margin business, that do not have a substantial amount of tangible assets, then you should thoroughly focus on the fact that you’re able to generate a very high return on equity as this is extremely important to an individual investor or private funding source.
Angel investors and private investment firms are generally risk adverse. Again, most private funding sources want to work with businesses that are within one hour of their home. Investment capital always comes at a very high price as you need to provide a substantial amount of equity to your investor. New businesses tend to carry a significant amount of risk. Angel investors typically are able to make their investment decisions quickly than a venture capital firm, which is one of the best benefits to working with these type of high net worth capital sources.