- An Angel investor provides capital for business start-ups or established businesses in exchange for ownership equity. These people have standby cash accessible and are on the lookout for higher returns that is more than the outdated investment returns. Some investors work in groups while others work independently. The expression “Angel” was Initiated in a Broadway theater where rich individuals provided funds to be paid back in full plus interest once production started making profits. William Wetzel devised the term Angel investors in 1978 after his study on how businesspersons raised up capital for business was completed. Angel was used to referring to investors who supported start-up businesses with small capital.
The home of modern-day Angel investors in Silicon Valley and home to the largest number of established businesses in the US.
Angel investors comprised mostly of retired entrepreneurs, doctors, lawyers, and other anticipated business individuals anticipating where to invest their seed funds to main extra returns.
Their motivation comes from persistent young businesspersons.
Source Of Funding
- Unlike venture capitalists, angel investors invest their own funds, not like venture capitalists who rather get funds from a pool from other professional managed funds. The most communal source of funds to these investors is family and friends, rich individuals which comprise lawyers, doctors, and those capable and willing to invest close to about $500,000 in return for equity. Groups and crowdfunding. Angel investment decision-making over the years has suffered from intellectual biases like the impression of control, and pride. Zhang, Stephen, Cueto and Javier (2015)
- Angel investment bears dangerously high risks and is bedeviled with a reduction from future investment circles.
- 2015, witnessed over 2,000 crowdfunding platforms globally that raised up to $34 billion
- In 2017 Angel investors invested approximately $25b into 70,000 corporations.
The most erudite and unconventional networks of Angel investors are found in Canada, China, Russia, the United Kingdom, and United State, and India with thousands of investors found around. Some Angel investors invest in a start-up but are not in the habit of advertising it. The National Angel Capital Organization (NACO) was established in 2002 and it comprises of 4200 investors, 45 incubators and accelerators, and 44 angel groups. Wikipedia
- NACO Canada was formed after the second Angel Investors Summit (2002)
- Henry Vehovec is the founding president and Chair of NACO Canada
- Previously in China, access to local angel investors was scarce up until 2015 when it was when numerous Chinese Angel groups started operating.
- List of 6 top Angel investors in China are; Kaifu Lee, Xu Xiaoping, Cai Wensheng, Xue Manzi, Lei Jun and Shen Nanpeng.
- The international Business ANGEL Assembly took place in Russia in the year 2012.
- The market size of Angel investment in Europe is more than €9.7b in Europe and more than $26b in both US and Canada and a further expected growth in the next 5 years possibly. Angel investors review (2022).
- The first 5 best Angel investors in Russia are Peeyoosh Pandey, Shantanu Saha, Arpita Chakraborty, Vipul Agrawal, and Himanshu Periwal.
- Peeyoosh is so notable that he is very fond of building a business from the start irrespective.
- The United Kingdom as a whole has about 4000 to 6000 angel investors and returns of up to 50 or 0 times are gotten as returns. The market grew around 2009 and 2010 irrespective of the recession then.
- In 2015 angel investments increased around the UK with a total of 5 investments carried out by an angel.
- Since London is a flourishing business and tech hub several angels have supported start-ups over the years in the UK, they are:-
- 24 Haymarket invests in disordered companies, tech, and media.
- Fig operating across Asia and Europe.
- Seedrs is an equity crowdfunding platform and has over time facilitated over £649m.
- Astia was Founded in Silicon Valley in 1991.
- Green Angel Syndicate.
- Investing Women.
- Silicon Valley is home to numerous Angel investors in the United States getting close to 39% of the $7.5b invested amongst newly created companies in the second quarter of 2011. Money tree report (2011). Angels in the US have largely accredited investors and are not only saddled with the responsibility of funding, but their capital to an extent contributes to the growth of jobs.
- Top United State Angel Investors are Jason Calacanis, Fabrice Grinda, Naval Ravikant, Daniel Curran, and Mark Cuban.
- Women Angel investors comprised largely 22% of the total angel investors, In 2015, the new female investors amounted to 30%.
- The total number of Angel investments in the US amounted to $25.3b. This slow growth is attributed to the covid-19 pandemic. Centre for venture research (2021).
- Despite the fact that there are numerous investors in India, these investors still have downsides of due owed in shares of newly established businesses.
- List of most active angel investors in startups in India: Rajan Anandan, Sanjay Mehta, Kunal Shah, Vijay Shekhar Sharma, Sunil Kalra.
- In January 20220, domestic startups acquired about $4.6b as capital which exceeded that of 2021.
- Tiger Global and investors based in New York invested in India thereby leading to an addition to the new firms. Tiger global funded a total of 8 Indian Unicorns in 2021.
- Angel investors in India mostly own a stake in the business and are at the forefront of the decision-making process.
Best Start-Ups Funded By Angel Investors
- There are tons of Startups funded by Angel investors all over the world, some on the list are;
Total Amount Funded
US and India
New York, US
New York, US
New York, US
Top Angel Investors Who Invest
Top active Angel investors and a snippet of investment outline;
|S/N||Names||Profile||No. of Investment|
|1||Alex Chesterman||Tides, Uniplace, Swoon Editions, Perkbox, Secret Escapes||29|
|2||Alexix Ohanian||Virool URX, Tutorspree, Tilt, Socialcam||129|
|3||Fabrice Grinda||Spotflux, eve Sleep, ecomon, Xango.com||647|
|4||Esther Dyson||Vlzu Corporation, Square, SponsorHub, tbh||99|
|5||Naval Ravikant||Vurb, Uber, Twitter, Tinychat,Visually, Topguest||200|
|6||Paul Buchheit||reMail, Zesty, Wufoo, Weebly, Virool||154|
|7||Scott Banister||iLike, Zappos, Vam, Uber, ToutApp||130|
|8||Daniel Curran||Zirtual, VetPronto, Verbling, Pillow, Luxe||176|
|9||Simon Murdoch||SubHub, SeeWhy, Vision Direct, Shutl||100|
|10||Mark Cuban||Superfeeder, Soundwave, Ranku, Meta Saas||138|
|11||Marc Benioff||Vurv, Quip, Tapulous, Zuora||129|
|12||Christine Tsai||Geekatoo, Binpress, Culture map, Reesio||153|
|13||Jeff Clavier||Grovo, Dogster, Ustream, Grouply||117|
|14||Joe Caruso||Zangster, Fam, docTrackr||123|
|15||Talmadge O’Neill||Facebook, Linkedin, Abra, 500 Startups||168|
|17||David Cohen||Solidware, Foodzie, Uvize||129|
|18||Ron Conway||Vook, Twitter, dotCloud, TrialPlay, imeem||90|
|19||Max Levchin||WePay, Vamo, Yelp, SmartThings, Yammer||85|
|20||Carlos Blanco||Citibox, Holded, Glovo, Housfy||120|
Process Of Applying For Fund Through Angel Investment
- Angel investing is sometimes perceived as a risky endeavor, and angels are picky about the startups to invest in after months of due process and proper procedures. The processes according to the Angel investment forum are:
1. Submit an application online: the application should contain what your company sells and proceeds
2. Screening stage: About two or three companies are invited each month in order for them to be presented to members. After review by the member once receives a pass, follow up or invitation response.
3. Presentation: The selected companies will be called to give a10 minutes presentation using PowerPoint, slides, etc.
- Members can discuss their impressions and make decisions after the presentation.
- When interested in one company feedback is given as to “Why”.
4. Deep Dive: When an interest in your deal is recognized, a deep dive meeting is scheduled.
5. Due Diligence: Here investors will like to consider the background of one’s team and company and promised commitments.
- They may likewise be interested in conversing with suppliers, and possible customers and selecting an assumption in accordance with financial projection.
6. Deal Negotiation: When positive due diligence is achieved, negotiation of the terms of the transaction commences.
7. Investment: On the basis of due diligence and negotiation term list, members can decide privately if and the amount to invest.
8. Follow up thru Exit: It is expected that quarterly reports are to be submitted to investors, so investors can stay in touch with the investee beyond these reports and help provide advice and counsel where necessary.
- A good relationship with investors makes it easier to approach them and other members in the forthcoming.
TV Shows Based On Angel Investors
Shark Tank Show
As a popular tv show, the show over time has tutored a lot of entrepreneurs and fostered their success. The show airing on tv has created awareness and effort has been made to promote public policies that will support the startup network. Entrepreneurs participating in the show have benefited from it and have been privileged to get mentors from sharks.
- Both Sharks and Angel investors are out to look for qualities and management in entrepreneurs supported.
- While others take Warren Buffet to be an angel investor, all the do buy shares in companies that have already gone public while Angel investors are responsible for investing before a company goes public.
Pros And Cons Of Angel Investors
It is easy to raise money from angel investors compared to institutional investors.
The is the absence of due diligence as compared to VC (venture capitalist).
At the seed stage financing cycle, angel investors help entrepreneurs in finding market fits, to ensure the business model is well figured out.
They provide only small seeds as compared to venture capitalists that provide close to a million.
The best angel investors are hard to find compared to venture capitalists. Crunch Base and AngeList
Angel investors require about 20-25% of equity.
They are not professionals or sophisticated like VCs.
Top 13 Interesting Facts About Angel Investors
In India, angel funds are controlled by SEBI, which permits these start-ups to gain support from about 200 investors.
They provide mentorship and networking opportunities.
Andy Ayim is the creator of the Angel Investing School in the UK.
Bob Xu who is the founder of Zhen Fund is the most successful angel investor in China.
These investors are extremely valuable for biotech startups that require access to primary stage funding.
Unlike loans from banks, investors provide their expertise to investees.
Angel investors are actively involved in any business they decide to invest in.
Angel investors community fund a large number of startups than all other ventures including venture capitalists.
Africa Angel Network (AAN) in both Africa and the Philippines is focused basically on the Tech area.
There were approximately 258,00 active angel investors in the US in the year 2007.
Olumide Soyombo is an active angel investor in Nigeria and he started investing in 2014.
Angel investors in the South Africa investment club exceed 29, 00 investors.
Angel investors in Nigeria are in their infancy.