Making Money as an Angel Investor

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Angel investors are high-net-worth individuals who invest in startups for a profit.

They make money when the startup exits by selling the business to another company or going public.

The vast majority of exits are through sales to another company.

The challenge for the angel investor is that most startups will fail or turn into lifestyle businesses.

A lifestyle business means the founders make a nice salary, but there's no exit for the investors.

Angels come in early on the business and so must wait the longest to receive a return.

Angel investors look for startups that are just entering the market, as the valuation is still fairly low.

They come in when the startup initially gains traction.

They look for product and market validation.

The product works, and customers will pay for it.

With this information, they fund startups with the hopes that the company will see an exit in five to seven years.

They suffer dilution when additional capital comes in.

Consider these points as an angel investor on how to make money from it.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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