All investments by angels (and everyone else) in a company are made according to detailed legal documents that specify everything about the relationship among the various parties, the terms of the value exchange and the various rights and responsibilities of everyone involved. The paperwork can range from 5-10 pages for a pretty straightforward convertible note, up to 120 pages or more for a full Series A round. Because these are legal documents, both parties (the company and the investor(s)) have their own lawyers, who work together to develop the actual agreements signed by the principals. Typically one lawyer will be responsible for the base drafting, with the other making comments, although in virtually all cases the documents are based on standard models that have been developed for use by anyone who wants to use them. Read more
In the US, many entrepreneurs see grants as “free money,” since they are not loans and don’t have to be repaid. A grant is not an equity investment, so the entrepreneur doesn’t have to give up a stake in the company either. Typically they can be used to fund product development and commercialization that would otherwise require outside investors.
A good place to start looking is the Small Business Innovation Research (SBIR) program, which is a lifeline for high-tech startups. A more general approach is to check out Grants.gov, which is a searchable directory of more than 1,000 federal grant programs. An advanced search tool is provided to search for a grant by eligibility, by issuing agency, or category. Read more
There is no such thing as a full-time angel investor (or if there is, I’ve never met one.)
If you mean someone investing mostly other people’s money through a seed fund, they are venture capitalists, and their days are spent like other VCs, meeting with prospective investments, mentoring portfolio companies, raising money from limited partners, negotiating deals, and so forth.
If you mean someone investing his or her own money, such an angel is likely to be investing into between 1 and 10 companies a year (I was doing 15 at my most active). Since the average investment amount per angel per company is about $35,000, you can calculate that using the same 2-3% management fee metric as a venture fund, the opportunity cost of the angel’s time for all those deals would be somewhere between $700 and $10,000 per year. Since all angels are Accredited Investors (which means they’re millionaires if they’re not otherwise employed) it wouldn’t make any sense for them to do this on a full-time basis.
Instead, most angels are either retired, in which case investing is a part-time avocation while they go about doing whatever they enjoy doing in life, or else they are actively running other businesses, organizations or other activities. There’s an old saying “if you want something done in a hurry, give it to a busy man”, and that applies here. Some of the world’s most active angels, such as Yossi Vardi, Reid Hoffman, or even me, all have extremely demanding day jobs, and squeeze angel investing into the nooks and crannies around everything else they do.
For example, I am currently leading the investment rounds in four deals simultaneously (probably some kind of angel record), and here is what my owntypical day might look like.
*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *
The venture capital fund itself makes money…
…by investing early in a startup company’s life, when success is not at all assured. In exchange for investing capital to help the company grow, the fund receives an ownership interest in the company. Because in the early days a company will not be worth very much, the fund’s ownership interest will be worth exactly what it paid. But as the company grows and becomes more valuable, the value of the fund’s corresponding percentage grows as well. Read more
Entrepreneurs are all about firsts, and the most important is you making a great first impression – on investors, customers, new team members, and strategic partners. Poor first impressions can be avoided, but I’m amazed at the number of unnecessary mistakes I see at those critical first introductions, presentations, and meetings.
The key message here is “preparation.” People who think they can always “wing it,” bluff their way past tough questions, or expect the other party to bridge all the gaps, sadly often find that what they think is a win, is actually a loss which can never be regained. Read more
The facile answer to this assumptive question is “because some women are not seeking funding from venture capital firms”.
But there is actually quite a bit of truth in both statements. Women-led ventures definitely account for a smaller percentage of venture investments than do ventures led by men, but women-led ventures also account for a MUCH smaller percentage of ventures seeking funding in the first place! Read more
The biggest change is the one that ALL serious angel investors eventually arrive at: no matter how smart or experienced you are, there are simply too many exogenous factors affecting outcomes for you to be able to pick only winners. Read more