Angel Investing 101

What is an angel investor?

An “Angel” is a high net worth individual who invests directly into promising entrepreneurial businesses in return for stock in the companies. Many are entrepreneurs themselves, as well as corporate leaders and business professionals.

How much do they invest and in how many businesses?

The Center for Venture Research estimates that U.S. Angel investors invested $22.9 billion in about 67,000 small businesses in 2012.  Many of the investments were in startup or early-stage companies.

What kind of companies do angels invest in?

Angels look for new innovative and/or disruptive companies that can grow quickly in sales and value (creating jobs along the way). Examples of angel-backed businesses include Google, Yahoo, Amazon, Starbucks, Facebook, Costco, PayPal, and many others.

How do angels help small businesses?

In addition to financial capital, top Angels mentor and coach their portfolio companies, often leading to healthier growth.  They introduce entrepreneurs to potential customers and investors, guide around potential problem areas, and help the startups gain credibility in their respective industries.

How are angels different from venture capitalists?

Angels generally invest their own money in start-ups and very early stage companies, while VCs mostly provide capital they have raised from others to later-stage businesses for growth.

How do angels relate to upcoming equity crowdfunders?

Angel groups (and individual Angels) are likely the next stage of financing and it is important to ensure that entrepreneurs have access to robust angel capital after crowdfunding.  These types of accredited investors are also important to entrepreneurs for their mentoring and advice, and for better structuring investments for long-term growth.

How many angel investors are there in the U.S.?

The best available estimates are that over 300,000 people have made an angel investment in the last two years (including accredited and non-accredited investors).  Many more people could become Angels – based on a net worth of $1 million or more, the potential number of angel investors is 8 million.

Is angel investing risky?

Yes.  A 2007 academic study found that angels lose some or all of their money in 52% of their investment deals because the companies go out of business.  The most sophisticated Angels make at least ten investments in order to make a return on their investment, counting on one or two to provide nearly all of their return.

What is an angel group?

An Angel Group involves individual Angels joining together with other Angels to evaluate and invest in entrepreneurial ventures.  Through this method Angels pool their capital to make larger investments and mitigate their individual risk.  The Angel Resource Institute has 385 American groups in its database.

What are the important statistics for angel groups?

In 2012, the median size for an Angel Group deal was $600,000 (often with several groups involved) per the HALO Report.  Group investment was distributed across the country, with two-thirds outside the traditional venture states of California and Massachusetts.

Is there a group near me?

Probably, there are now groups in operation or development in almost every U.S. state.  The number of groups has more than tripled since 1999.  Locally, we recommend you consider Charleston Angel Partners a direct affiliate of the Charleston Angel Conference.

Why are angel groups important?

Angel groups are generally easier for entrepreneurs to find and often become the central connector of deals in their communities.  They include some of the most sophisticated and active angel investors in the country, have been recognized for job creation and generation of additional venture capital for companies, and are a leading indicator of angel investor activity.

Where can I get more information?

Go to, the Angel Capital Association has over 200 affiliates and member angel groups, which represent 10,000 accredited angel investors in all 50 states .