Angels, Are They Real?

They are real, but few survive . High risk investing is dangerous for your bank balance . The process towards extinction is that an angel risking money in an enterprise . It lacks . Then he joins a group of angels and risks money in another company . It lacks . At this point , the angel usually presented in his or her wings .

To be an angel must have considerable discretionary income. This is why most angels are lawyers , accountants , doctors or successful small business . Lawyers and accountants often form angel groups from their customer base . Their goal is to ride on the roller coaster without paying for the ticket . Their clients invest in the project and they get a piece of the action . Since the action is usually bad , all they get from the effort is a reduced customer base .

Angels want to invest within fifty miles of their location . This allows them to the office or the business of investment visit on a regular basis. If the company begins to fail , the proximity card encourages the angel trying to take over. Business investment This error is often made by successful small business .

I would defer to a study on the chances of attracting an angel on your business . However, my experience shows that an angel will invest in about one out of every hundred company that angel send their business plan. My experience is based on working with San Francisco Bay Area Venture Capital clubs over a decade ago. Given the heightened interest investments today , your odds are better than one - in - 300 .

Eighty-five percent of small businesses fail . Of the 15 % that succeed are franchises and professional offices . My guess is that an angel has about one chance in ten to earn a risk investment money. The angels think they can beat the odds. They are wrong .

Most lawyers, accountants and doctors realize their social position and income by believing what they read . As a student , if you ask the data in a textbook , you are probably on the final exam . This pattern of read and believe the student from first grade to medical school or law school . Believe what you read in a business plan is often a mistake . Professionals tend to believe the written word . In addition, as the basis of a risk - capital investment is fatal . If more than one told when they are in their wings , "I think I need to increase to compensate for my business. Loss my fees" I 've often wondered if blocking professionals like angels legal and medical expenses not professional me would decrease .

Small business owners believe they are " smarter than the average bear. " It is their ego that often clouds their judgment . If you do not believe that you've made ​​a mistake, you will have to dump into a black hole investing more money. It is this group who are most likely to turn in their wings when they file for Chapter 11 . " There is a time and a time for them to expand to keep them. " Successful small business people do not believe in folds .

There are always angels come into the market . We live in boom . The population of angels grows . If you can catch a nearby angel do it . It is best to catch them before they reach the financial fire that most of them hold.

Just like buying lottery tickets , there are a few successful angels. I would like a study of how long they take to see if they hit the investment opportunities .

Published February 2000