"Angel investor"

[FerrousOxide]

Evening all.

I received an email from my old Uni today informing me that they've appointed a new governor. Now I've kept myself on the mailing list there, so I guess I'm at least slightly invested in the place, by I was intrigued/bemused by this bit of the copy...:

"XXXX is a hugely experienced Executive and Non-Executive Director, Chair, Board Advisor, Angel Investor and Founder."

Can't help but thinking that being an "Angel investor" displays a certain fiscal naivety (unless there's something I don't know about).

TL:DR What the fk is an Angel Investor??

[underwhelmist]

FerrousOxide said:

Evening all.

I received an email from my old Uni today informing me that they've appointed a new governor. Now I've kept myself on the mailing list there, so I guess I'm at least slightly invested in the place, by I was intrigued/bemused by this bit of the copy...:

"XXXX is a hugely experienced Executive and Non-Executive Director, Chair, Board Advisor, Angel Investor and Founder."

Can't help but thinking that being an "Angel investor" displays a certain fiscal naivety (unless there's something I don't know about).

TL:DR What the fk is an Angel Investor??

The only time I've heard that term is when people invest in films, plays, or other art projects that wouldn't get made otherwise.

[shtu]

Does a lot of work for chareedee. Doesn't like to talk about it mate.

[akirk]

angel investor usually refers to investors who put time / expertise in as well as cash...
usually in smaller companies, they will probably go on the board and mentor the executives / add relevant experience...

tend to sit between family and friend investment level and more corporate / vc investment... maybe £50k - £200k etc.

[TUS373]

High net worth individuals, usually invest ahead of venture capitalists. Good tax breaks given to seed investors. High risk, good stake, good reward.

[dmahon]

It’s a very widely used term and nothing shady at all. It’s just an individual who invests in small private companies to help them during their early stages. As people above said, high risk, high rewards but the tax breaks mitigate the risk.

[BobToc]

It’s a recognised asset class, but I’m deeply sceptical of the risk-reward. I think it’s a lifestyle choice for most angel investors - the chance to stick your oar in with a few start-ups, and maybe one of them turns into the next Uber.

[dmahon]

BobToc said:

It’s a recognised asset class, but I’m deeply sceptical of the risk-reward. I think it’s a lifestyle choice for most angel investors - the chance to stick your oar in with a few start-ups, and maybe one of them turns into the next Uber.

I’ll share some numbers.

I have invested in 4 companies.

20k, 25k, 35k, 80k for around 5%-10% in each.

I think generally “angels” write slightly larger cheques, but I’m generally helping one person get their MVP built and land their first customer, so really zero to one stuff.

After a year or so, one of them has lift off (around 4m run rate), the others are slow but still alive and in sales cycles.

The business which is breaking out is worth 3x revenue - 12m. My 5% share is therefore worth 600k vs 150k invested overall. As you can write off the losses against capital gains tax, it has the potential to be a fairly lucrative investment and I haven’t worked out all of the SEIS government schemes yet.

It’s similar to VC in that you are looking for one winner to cover the losses of the others.

In terms of time, I contribute between 1 and 5 hours a month helping where I can plus provide some customer introductions.

Still a long way to go before I’ll judge it as a success and it could take years to get to realise the profits in a liquidity event, but it’s been quite interesting.

Edited by dmahon on Thursday 13th May 06:05

Edited by dmahon on Thursday 13th May 06:07

[StevieBee]

My interpretation of an Angel Investor (and would welcome the confirmation or otherwise of this from dmahon) compared to say a Venture Capitalist or similar is that they tend to take a broader look at the businesses they invest in and make investment decisions based upon what they believe to be a good bet - rather than rely purely upon detailed business plans and complex projections.

[dmahon]

StevieBee said:

My interpretation of an Angel Investor (and would welcome the confirmation or otherwise of this from dmahon) compared to say a Venture Capitalist or similar is that they tend to take a broader look at the businesses they invest in and make investment decisions based upon what they believe to be a good bet - rather than rely purely upon detailed business plans and complex projections.

I think it’s true.

Early stage angel investing you are purely betting on the person and the idea and looking to get the ball rolling in the company.

Seed stage investing you might look for a tiny bit of traction in the business.

VC stage you start looking at revenue, growth, margins etc, so much less about the individual founder.

PE comes after that but I’m less familiar with that world.

[hotchy]

Always thought it wss someone who would listen to your idea then help with the capital if they think its got potential. They also offer help aswel as just finances. Dragons den sort of thing.

[iphonedyou]

dmahon said:

In terms of time, I contribute between 1 and 5 hours a month helping where I can plus provide some customer introductions.

That must be a helluva productive hour (seriously).

[FerrousOxide]

Well there you go. Thanks for the replies folks, I had no idea this was an accepted term. I guess I move in different circles, so thanks for the information. Always good to learn something new.

[stub101]

Certainly nothing shady and ‘angel investing’ has been around for many many years. I’ve had involvement for 15 at least...

It’s becoming much more mainstream and IMO will prob end up a fully regulated asset class in the next 5-10 years.

It’s hard to get exact figures as not all is disclosed/made public but in 2020 estimates are that £3-5bn was made in angel investments into UK early-stage businesses.

https://ukbaa.org.uk/

[Al Gorithum]

I'm an investor in businesses that are well managed or in trouble, having revenues between £0.5m and £5m.

[hyphen]

Al Gorithum said:

I'm an investor in businesses that are well managed or in trouble, having revenues between £0.5m and £5m.

I know of an amazingly profitable company needing investment, but its badly managed. So won't qualify with your strict criteria.

Go to Hell, Angel!

[Al Gorithum]

hyphen said:

I know of an amazingly profitable company needing investment, but its badly managed. So won't qualify with your strict criteria.

Go to Hell, Angel!

That wouldn't put me off if I can put decent management in place.