Three Kinds of Angels - Maybe Four or Five
As you seek start up financing for your company you’ll find angels that can and will invest in your startUP. The key to dealing with angels is understanding whether you have a Real Angel in front of you or not. If you do - it’s worth the time even if you don’t get their money. On the other hand if the angel in front of you is a dud - they’ll take way more of your time getting you absolutely no where but frustrated at the time & effort down the drain.
You might get money from anyone of the five angel investor categories, but RELIABILITY in your fund raising is the most important achievement. There are five kinds of angels you’ll bump into as you seek investment capital for your start up.
Fortunately the largest group is indeed real - Real Angels make up about 50% to 67% of the folks that pose as angels.
So even if you’re not on top of things you’ve got a 50% chance of getting the real deal. These angels have real substance and they’ve invested during other downturns. They have real substance regardless of market direction. In down times they realize the increased need YOU have for their investment. They’re experienced so when volatility exists, the markets are down, they expect you to defend why the price you’re asking is reasonable. Be flexible. Get the money.
Now the next kinda angel investor you’ll find is a Newbie. About 1/3 of the angels you’ll meet have investment money from a rising tide - read a rising market.
Newbies are angels that join in on the tail end of an investment and liquidity period. What’s that mean? Long after other Real Angels have continually invested, and begun to see returns with acquisitions and IPOs, Newbies start to look and they say “I want that return as well”. Newbies generally enter the angel market at the end of a rapidly expanding stock market cycle. Why? The public stock or mutual fund or 401k, etc. they have has risen sufficiently to create what they think is disposable cash and they’re excited to get the returns they see others getting - others of course being Real Angels. When the market turns down they have no available cash and they make no investments - yet they look at plenty of them and waste tons of time. Your time.
The final three categories, again fortunately, make up from 3% to 17% of the possible angel investors that you’ll meet.
Jumpers make up anywhere from none to 10% of possible angel investors. Jumpers come out of nowhere - referred by someone - maybe they have a little less money than others and they move quickly to provide money - angel money - $10k, $20k, etc. get lucky!
Drunken Money is almost negligible but they exist maybe at 1% to 2% of possible angel investors. They just have no idea what they’re doing and they write checks with no logic, and no reliability.
Stupid angels finally round out at 2% to 5% of angel investors. These guys also have no idea what they’re doing, they’re very slow, need to be reminded all the time, need double, triple sets of stuff, do nothing logically, and may even cause problems since they speak to others advancing their incorrect conclusions screwing up your deal before you even get to others. avoid at all costs!
SO HOW DO YOU TELL ONE ANGEL INVESTOR FROM ANOTHER? check this out for now. we know you’ll need that.