The
Center for Venture Research at the University of New Hampshire does significant research on
angel investor funding for small businesses. They have developed a profile of
angel investors listing a number of characteristics that seem to typify the angel investor. Here’s what you, the small business owner, are looking for in an angel investor:
1. Location and Investment of Angel Investors
Most angel investors invest only a few hundred thousand dollars at most. Most are located geographically close to the businesses in which they invest.2. Type of Investments
Most angels invest in small, start-up businesses with fewer than 20 employees. The arrangements are usually pretty informal and are the largest source of external equity capital for the firm.3. Where Investments are Made
Seven out of 10 angel investments are made within 50 miles of the angel's home or office.4. What Return do Angels Expect?
Angels expect, on average, a 26% annual return on their investments. They expect approximately one-third of their investments to result in a substantial capital loss.5. How Many Proposals do Angels Fund?
Angels fund 3 out of 10 proposals submitted to them. They would invest 35% more if acceptable proposals were available to them.6. Why do Angels Reject Small Business Proposals?
Angel investors say that insufficient growth potential, lack of sufficient information about the entrepreneur, overpriced equity, and lack of managerial talent are the main reasons they reject proposals.7. Personal Traits of Angel Investors
On average, the angel investor is about 47 years old, college educated, with an income of about $90,000, and a net worth of about $750,000. They are typically self-employed and invest $37,000 per venture.
