What does it feel like to be an Angel Investor?

 

Over the last decade, angels have invested a collective $20 billion per year in US-based startups and ventures alone. But who are they? And more importantly, what's it like to step into an angel's shoes? Here's 5 things you should know about angel investors, or what society calls angels.

Profile of an Angel Investor

When we hear the word "investor", many people immediately envision the corporate suit and tie type who likes wine and always comes to exclusive gatherings and private parties. This couldn't be farther from the truth. Angel investors are not necessarily included in the "1 percent" of the world. Many have yearly take-home salaries of $200,000 or less. Some angels are former or current entrepreneurs and executives who are attracted to privately-held, early-stage startups because of their expected higher ROI.

Involved in High-Risk Ventures

Any investment poured into a newly found business is considered to be high risk because of the simple fact that the business has yet to establish a track record of success from which investors can use as a baseline for gauging risk and reward. If you have sleepless nights because of a current investment that is losing, angel investing is probably not the right career path for you. However, if you are okay with taking on high levels of risk in exchange for potentially higher gains in a 5- to 10-year time horizon, then invest away.

Disciplined and Hardworking

Despite being financially well-off, angel investors work as hard as anyone to maintain and consistently grow their net worth. They don't just sail off to the Bahamas or take their private jets to see their favorite football team play overseas. Depending on your neighborhood, you can even find one or two angel investors who are regular people with stable, high-income jobs like doctors and lawyers.

Perks of being an Angel Investor

Money is not the only reason why angels invest in startups and small businesses. They also use it as an opportunity to support worthy causes and be involved in projects that they are passionate about, like renewable energy or space exploration. Seasoned angels will spend most of their time talking with like-minded entrepreneurs and CEOs about future innovations.

Overall, angel investing is a great career path to pursue. It gives you the opportunity to travel, meet brilliant people, and make money in the process. Of course, it does not come without challenges. You will have to endure failed ventures and capital losses before you become a successful angel investor.

David Milberg is an investor and entrepreneur from NYC.