Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups

As you can see, VCs and angels have a lot in common. So how exactly do they differ? The chief difference, of course, is that angel investors are investing their own money, while venture capitalists are professional investment managers who invest other people's money.

Venture capital funds, at the other end of the spectrum, are commercial organizations whose business it is to find the 5 to 20 companies each year that they believe have a chance of being one of the only 80 companies a year that will ultimately exit in a sale of over $50 million. Because funds are highly visible and listed in the phone book, every

elusive. The number one thing I look at when making a startup investment is the quality of the entrepreneur. In this, I—and a majority of professional angel investors—follow the old adage: “Bet the jockey, not the horse.” There are countless examples in which a great entrepreneur has taken a moderately good idea and ridden it to outstanding success

The number of companies able to get outside funding then begins to drop by orders of magnitude: the percentages (again, very rough) are that 25 percent of startups will get friends-and-family money; 2.5 percent will get angel money; 0.25 percent will get early-stage VC money; and probably 0.025 percent will make it to later-stage VC funds, with onl

The smartest entrepreneurs, in my experience, understand that they have a great resource in their investor base, and will provide regular updates while not being hesitant to ask for help when needed. Typically, that help will involve sales leads or introductions to potential partners or investors or assistance in recruiting executives. Rarely will

According to Josh, the goal of a seed investment is “to validate, de-risk, or disprove the entrepreneur's hypothesis as quickly and cheaply as possible.” Since the cost of starting a company was beginning to drop exponentially, this could be done with small amounts of money compared to traditional venture funds. The initial First Round Capital fund

How detailed and specific should you expect these plans to be? It depends on the amount of capital to be raised and the context of the projections. The smaller the raise, the more specific and detailed the plans for the use of funds should be, and for a shorter presentation, the projections should be more general. For example, if a company is raisi

Startup founders are thirsty for advice and guidance about business in general and startup funding in particular. Writing a regular blog (you need to write regularly, not sporadically) is an excellent way to show entrepreneurs (1) that you are smart, (2) that you are helpful, and (3) that you are interested in hearing about companies in specific ar

What is absolutely critical about giving advice, however, is that it be done with no direct expectation of financial return. There are many self-proclaimed advisors/mentors/Sherpas who pitch their services to startups in exchange for fees, equity, or other compensation. While I'm sure that they make a few bucks from this, I guarantee you that it do