Become an Investment Angel

Wednesday, April 12th, 2017

Fancy yourself as an entrepreneur? If fresh ideas are something you’re passionate about, your future as an angel investor could be a bright one. Put simply, angel investors take a chance on the ideas of other people – and front up the much-needed funds to bring those business dreams to market. Providing funds in exchange for a slice of the return can be a smart investment strategy and if you understand business trends and know how to tell the difference between a start-up that is set to fail and one that might just be the next big thing, you could be on a definite winner.

Start-up success stories

As today’s workplace habits continue to evolve, the number of start-ups hitting the scene is huge, as more and more people plan their professional future as their own boss – rather than an employee of someone else. But being an angel investor – and doing it well – is not an easy thing to do, so read these tips first, to see if angel investing is right for you.

Show me the money

To be an angel investor, you need access to funds – and we’re not just talking small potatoes. If your plan is to invest in high-risk companies at their very early stages of potential success, the truth is that many will fail – and that means your financial downfall as well. Successful angel investors know the importance of diversifying, with angel investment commitments ranging from as little as $10,000 to as much as $100,000 or more. Angel investors who do this professionally, often have interests in as many as 20 start-up ventures, with their risk spread across a number of industries. Talking to your accountant, a commercial lawyer and an experienced finance broker is essential to your success – they are your dream team of angel investment success.

Psychology 101

Have you got a great poker face and nerves of steel? Once angel investment money goes in, it doesn’t come out until the end and knowing when to hold on and when to let go is critical. In the case of angel investors, if half your company dies, it’s pretty standard so you have to be able to weather the storm and have the assets and funds to keep you going, while you wait.

The potential reward is that, even if just one in 20 of your investments explodes, it will return enough to make up for the other 19.

Specific experience counts

Angel investors often do best when they have a niche interest in a specific sector. Because their experience helps them make educated decisions, they make smarter choices with investment funds and strategies – with more chance for positive return and less risk. That niche might be tech, health or education – if you have proven experience, insights and connections with a specific sector, that will be your best bet for angel investment success.

Build a community

Having a community of like-minded people and trusted referral partners and professional support is key.

You can’t do it alone and by surrounding yourself with the right team – legal and finance professionals, for one thing – you will have top quality advice at your fingertips when you need it.

Understanding the risks for everyone involved is important, so talk to others who have done it before you, to make sure you truly understand the potential pitfalls – not just the potential rewards.

If you have any questions about your finances, either personal or business, please do not hesitate to contact Loans Actually on (03) 8805-1850 or email glenn@loansactually.com.au.


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