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What our members have to say...
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"I recently came across your site while browsing the internet. I have a 4 year old recruitment company and need to find an investor to expand. I signed up on your site last week and paid my subscription last Friday. Since then I have had contact from 3 very eager investors and am confident of securing the finance I need to expand and grow my business. I just wanted to thank your company as I find this to be a very professional and worthwhile site. I was reluctant to pay the €149 subscription to the site last week as I was worried that I may never hear from anyone but I was proved wrong and the site is working better than anticipated. Feel free to add this to any testimonial page you may have as it’s a fantastic concept and service you offer and it works."
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Darren Darley - www.1stop.ie |
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3 Common Mistakes Made by Angel Investors
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While launching FinServe Tech Angels, I have had the opportunity to speak with many high net-worth individuals that have tried angel investing. After listening to their stories, I believe that there are some common mistakes people make when trying to invest in start-up companies. Below are three mistakes I have heard over and over again:
● Having too small a portfolio - Most people I meet that have unsuccessfully tried to do some angel investing make a big mistake by only investing in one company. Instead of taking $100,000 and making five $20,000 investments, they put all the cash they have set aside for their early stage portfolio in one company. Building a successful start-up is so statistically difficult that investors have to diversify their portfolio's. Even professional venture capital funds expect half their portfolio to fail. Angel investors need to place multiple bets if they are going to succeed.
● Not looking at enough deals - Another common mistake among angel investors is not looking at enough investment opportunities. Professional venture funds expect to look at 100 companies for every individual investment they make. By looking at lots of opportunities, you notice trends occurring in an industry, hear about competitors, and can pick the best management teams for your portfolio. Unfortunately, many people who try angel investing do not look far and wide enough to find the deals that are right for them.
● Not knowing when to quit - Another misstep I see some angels make is not knowing when to let an investment go out of business. This relates to not building a large enough early-stage portfolio, but many angels try and protect their investments by pumping additional money into them, even when a company under-performing. Unless a start-up can demonstrate that they have taken the initial money received and increased the value of the company, it is not always wise to provide them with additional resources. It is better to let the under-performing companies in a portfolio go out of business and focus additional resources on the investments that are doing well.
There are many ways to avoid these common pitfalls. Joining an angel group is a good way to see more potential investment opportunities, build a portfolio, and use trusted colleagues to help determine a company’s progress. When it comes to angel investing, if you can avoid these common challenges, you will have a much better shot at taking advantage of the great potential returns start-ups can provide. |
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