Angel Investing 101

Frequently asked questions & Answers

About Angel investing & Venture capital invesTING

 

What is an angel investor?

An angel investor is a person who invests in the earliest stage of a startup's life cycle.  The angel investor is someone who sees potential for a startup's long-term value and offers that startup the capital to grow the company. 

Angel investing typically occurs in what's called a "Seed Round."  Seed rounds are typically when an angel investors writes a check between $25,000 to $100,000 in a startup, which is most often valued at less than $10 Million before launching.  

An angel investor is an individual with a high net worth who invests his own money in startup companies. Angel investors are typically qualified as accredited investors, which means they have a net worth of at least $1 million or an annual income of $200K. These types of investors are usually entrepreneurs or businessmen who have a passion for a specific industry that they want to see grow.

Some of the most successful angel investors include: our founder, Ross Blankenship, Naval Ravikant (founder of Angel List), Paul Graham, Chris Sacca, Jeff Clavier, Keith Rabois, Peter Thiel, Ron Conway and Fabrice Grinda.

What is venture capital?

Venture capital is the field of investing resources and capital into a startup's "growth" phase.  Venture Capitalists look for proven metrics and analytics to show verified demand for a product and consistent growth.  After evaluating the startup's growth prospect, venture capitalists typically invest in a Series A, B, C, D, and Pre-IPO rounds.  

Venture capitalists (and firms) often write checks for between $100,000 to $10,000,000 in a startup.  This number of course depends on what the economics and control of the deal might be.  

How can you become a successful angel investor?

If you want to become a successful angel investor, you need to know that the process is more than just writing a check.  To become successful at angel investing you need three things:

  1.  a passion for the industry in which you're investing,

  2.  the time and consistency to meet with startups and to become a mentor, and

  3. the ability to be patient.  After all, some of the most successful angel investments took 5 to 10 years before they return 1000x on the original investment.  

To become a successful angel investor you need to want to have a big impact on a startup, and big returns from the time and energy you spend.  Perhaps you are an affluent individual who wants access to top startups where you can create jobs and have an impact on the American economy.  Indeed, Angel Kings investors are startup business leaders themselves - entrepreneurs and visionaries who create jobs and have have an impact on the lives of people are America. 

How can you invest in startups?

Once you verify whether you are an accredited investor, we will require a membership fee within 24 hours. Once this membership fee is paid, you will get instant access to America's top-ranked startups.

What is the new SEC's JOBS Act?

The Securities and Exchange Commission voted unanimously to propose rules under the JOBS Act to permit companies to offer and sell securities through crowdfunding. Crowdfunding describes and evolving method of raising capital that has been used outside of the securities arena to raise funds through the internet for a variety of projects ranging from innovative product ideas to artistic endeavors like movies or music. The Jumpstart our Business Startups Act is changing the face of angel investing and creating new opportunities to access fast-growing startups.

What are angel investing groups?

The purpose of angel groups is to provide early-stage investors with a platform where they can combine efforts with other angel investors to provide startups with one large, collective fund instead of multiple smaller funds. Investors typically want to invest in multiple funds rather than just putting all of their money into one. However, startups need a couple million dollars to get their businesses going.

Why should I invest in a startup?

If you are considering investing in businesses with the expectation of making tons of money with no strings attached, think twice! Investing in companies is very risky, especially when investing in startups. Most investors are entrepreneurs themselves and decide to invest in other startups to support other entrepreneurs down their similar paths to success.

How can I decrease my investing risks?

Don’t put all of your eggs in one basket. Although you should diversify your portfolio, it is best to invest in a couple of seemingly promising startups rather than hundreds of random ones. Angel Kings hand picks the hottest, best startups and organizes them by investment category for you. You should also choose investment funds that suit you best so you are well knowledgeable on the business and industry.

How are the startups’ valuations determined?

The startups themselves are responsible for their own valuations based off of the information they provide us to back up their claims. Valuations often shift over time depending on how much funding they receive and how quickly they grow with it. Early-stage startups that are growing fast are valued around $3 - $5 million at first. The type of industry and current associations of the startup also has an impact on valuation.

How long until I see a return from investing?

Returns vary for every investor. It could be years or decades before you see a return.  The best angel investments from the past 20 years (with 1,000 to 10,000% returns) took between 4 to 10 years.  This means that patience is required in order to become a profitable angel investor.  

What is a venture capitalist?

A venture capitalist or "VC" is an individual or group (General Partners) that makes calculated investments in early stage companies and returns the profits of their early investments to original limited partners (LPs). A venture capital firm like Angel Kings has calculated ROI and makes investment decisions based on historical performances of similar or new companies in the same industry.  

Where can I learn about investing in startups?

The best place to learn about investing in startups is by reading the best-selling book on startups and venture capital investing, Kings Over Aces, by early investor and expert Ross D. Blankenship. Blankenship is also the founder of Angel Kings. 

In what kinds of startups does Angel Kings invest?

We are focused on biotechnology, drug discovery, health and life sciences, and medical innovation.  At times, and when the opportunity is right, we do invest in emerging technologies such as cybersecurity and drone technology.  Angel Kings' venture capital fund accepts investors who want to invest in the newest and most innovative biotechnology with the highest projected growth and sustainability.