Saturday, December 8, 2012

-  Types  of Angel Investors -

You will find angel investors with differing personalities and motives on our network on PithStreet. Despite this adversity, many angel investors fall into three main categories:

ROI angels- These investors like high-risk investments, looking for a a nice financial reward at the end. They look to see what other investors are getting in your company, and use this as a big part of analyzing your investment. They invest frequently in many companies with the purpose to add on to their portfolio of investments. They don't put too much effort in staying active in their companies. They tend to invest when the market is striving, and stay low when the market is showing poor performance.

Core angels- These investors have lots of business experience due to running and operating their own successful businesses in the past. They understand that businesses has ups and downs, so they tend to stay with their investment companies despite any losses. With a diverstified portfolio, they are great mentors and advisors for a wide range of industries.

High-tech angels- These investors like to invest in the latest trends of modern technology. 

They enjoy risk, and the idea that their investment can bring new technology into the market place. As they usually don't have as much experience as core investors, they will probably not be too active in the company. They might not even enjoy working in a business atmosphere.

Different types of angel investors

Corporate angels- These individuals have experience working in large corporations. Usually these investors have retired, due to downsizing in the corporations they worked out, or a switch over in position. Not only are they seeking a financial reward, but they are also seeking a personal gain, probably a job. It is actually known for corporate angels to invest in a company, and try to put a paid position in the deal as well. They may use their capital i as a way of power in the the invested company. 

Entrepreneurial angels-These individuals are already operating their own business. They use their flow of income from the business to make investments in other startups which helps them increase their net value. They make mid-size investments, usually from $200,000 to $500,000. They will usually invest more money into the company as it progresses. As they are busy with their other businesses, they rarely become actively involved in the company.

Enthusiast angels- These investors are older businessmen with a high net value. They invest in companies for more of a hobby, usually small amounts between $10,000 to a $100,000. These investors do not plan to take an active role in management.

Micromanagement angels: These are the serious investors. They were usually born into their wealth, but have been working hard over the years in their own independant efforts. They have high demands in their investments, liking a board position and try to impose their own strategies into their invested companies. They make high investments, usally between $100, 000 to $1 million dollars. They aren't too keen on becoming active in the company's management, but if their invested companies start to decline in productivity, they tend to start putting more effort into the company. 

Professional angels- These investors are employed in their field, such as lawyers, accounts, etc. They like to invest in companies that are based in their industry because they are familiar with it.  They may invest in numerous companies, with investment usually between $25,000 to $200,000. They are great for the first round of capital needed for a startup, but usually do not invest in the same companies more than once. They are also great, for they may provide their services, such as financial or legal, at a discounted rate.

Other kinds of angel investors

Head angels- These investors are are great for bringing together other investors in your company. They like to take lead, and be the investor in the company.

Mentor/guardian angels- These investors are great mentors and give good advise in their invested companies. They are great for young companies, and new entrepreneurs.

Generational angels- These angels have been born into investments. They are usually younger then the average investor, but don't let that fool you.

Intentional angels- These investor's main mission is to take over the founders in their invested company. They may appear interested in the company, but be careful of their intentional motive.

Typical angels- These angels have a high net worth  and like to invest because of social responsibility and community involved. Anything to make themselves look good.

Inexperienced angels-These angels are the "babys" and not yet established any experience and credibility in angel investing.  They invest in what others are investing in, not in what they want to invest in independently. After their first few investments, they will either give up, or continue investing thoughout their lifetime.

Female angel organizations-  These angel networks are dedicated to supporting women in the male-dominated workforce. While they do focus on women, they don't technically only invest in companies managed or owned by women.

Venture capitalists who are also angel investors (“moonlight as angels”)- If an investor in a firm finds an investment extremely favorable, they might decide to privately invest. They may do this if the venture does not fit the firm's criteria, but will personally get a great opportunity from the investment. There investors are also called "moonlight angels". Some VC organizations have strict rules and prohibit their investors from making personal investment, but this is rare.

Will work-for-equity angels- These investors have services they like to trade for a percentage of shares in the company. This can help a startup by saving money in the long run. However, if you are not aware of the value you are exchanging, it can decrease the economic value of the company.

Non-company building angels-These are technology investors that only invest in developing technologies, rather than creating a portfolio in investments. They are great for entrepreneurs looking to license their inventions.

 Selecting a well-matched investor on Pitch Street can make quite difference between establishing a strong foundation for a company or a failing venture. So when you are looking for an investor, be sure to know what you are getting yourself into.

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