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The Angel Investor's Handbook

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The Angel Investor's Handbook

How to Profit from Early-Stage Investing

Bloomberg Press,

15 min read
10 take-aways
Text available

What's inside?

Want to be touched by an angel? An angel investor that is...

Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

Gerald A. Benjamin and Joel Margulis tell the current or prospective angel or early-stage investor how to best judge pre-IPO investments. They emphasize matching investors with the right entrepreneurs to create an effective team in which the investor not only provides the seed or early-stage capital but also contributes good advice and contacts. Besides discussing effective strategies, the book includes an extensive directory of top venture forums, angel organizations, publications and Web sites. In addition, any investor will benefit from the thorough rundown of due-diligence points that the authors recommend. While the book is targeted at prospective investors, getAbstract encourages entrepreneurs with start-up companies to use it as a productive guide to making more effective funding pitches, although the companion book for entrepreneurs would probably be more helpful. One caveat: Some ideas are repeated – even with similar wording – from chapter to chapter. But overall this is a solid book, even though the free flows of money it evokes have been arrested somewhat lately.

Summary

The Growth of Angel Investing

Today, a growing number of private investors are investing a growing pool of capital. About five years ago, the average private corporate investment was $25,000 to $50,000; now it is $100,000, based on an average of $10,000 to $2 million per investment. This approach creates a great opportunity for income generation. About 90% of all U.S. millionaires gained their wealth through their own efforts, not by inheriting money. They know a successful start-up can be extremely profitable.

Most private investors in the United States come from the nearly one million, high net-worth households. Investors can participate at these stages:

  • Seed - The idea stage when a company is first being organized.
  • Start-up - The end of product development and the start of initial marketing.
  • R&D - The product-development and financing stage for more developed companies.

Or investors can join in, with less risk, at these later stages:

  • Bridge - The stage where a venture needs short-term capital to become stable.
  • Acquisition and merger - When a company wants funding to acquire another company...

About the Authors

Gerald A. Benjamin is a senior managing partner of International Capital Resources, a capital-sourcing firm with 14 offices in North America. He is also senior editor of The Private Equity Review, chairman of the Northern California Venture Forum and executive director of the Private Equity Research Institute. Joel Margulis has written books on a range of subjects and is currently a university lecturer on writing. Both authors recently co-authored Angel Financing, which focuses on raising capital, the flip side of angel investing.

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