Angel investors are a specific type of accredited investors focused on providing financial support for new companies. In the recent period, angel investors have become very important part of the economy because the number of startups is increasing. Every year, the amount of investment that is injected into world’s economy thanks to these angel investors is increasing for more than 25%. One of the main reasons why people are becoming angel investors is the fact that this form of investment promises a great return. But, not all of them are successful and some of them are experiencing failure. That’s why we have decided to analyze the success and failures of angel investors.
To start with, every angel investor should be prepared to lose money. This is a type of funding that brings many risks and that’s why the return on investment is so high. The reason is simple, they are investing money in projects that are just starting and whose future is difficult to predict. According to some statistics only half of the angel investors recover their investments. However, about 10% of them witness returns that are ten times higher than their investment.
In some cases, the difference between failure and success as an angel investor is determined by their choice to leave a company. Namely, there are situations when angel investors are pressured from the rest of the investors to leave the company. This is usually a clear indicator that your investment is safe. Keep in mind that this is not a quick journey. You should have a plan for a venture that will last for at least 4-5 years. There will be times when it will be smart to exit, but you should never exit too soon in cases your money is invested in a winning company.
Another thing that is worth mentioning is that unsuccessful angel investors are the ones that stick to the same beliefs and opinions all the time. A successful angel investor is an investor that is open to new ideas and opinions. They are listening to the tips and advice they get from more experienced people. There is no universal rule for investments and things are changing all the time. So, be prepared to change whatever opinion you have.
Successful angel investors are not following the current trends caused by media hype. If something is already exposed in mass media, it is probably too late to invest in it. This is something that every experienced angel investor knows. If you want to witness success you must stay ahead and be able to spot the future movements.
Finally, don’t forget that patience is a virtue that every successful angel investor should possess. Angel investing is closely related to investing in a business that has just started developing from an idea. This means that it will take the time to see the results. All you need to do is trust your instinct and trust people. Of course, if you notice big losses, you will need to learn how to cut them fast.
