In this day and age, Business Angels and angel investment are becoming more a part of small businesses and start-up companies in particular. This is even more crucial in countries that do not have a strong financial market and can be quite difficult for small businesses and in some ways, for innovative new ideas to take off.
Yet while Angel Investment is nothing new in the American market (estimates say that there are approximately 259,000 angel investors that are active to some extent), it has only recently taken off in European countries where EBAN estimated 75,000 active angel investors in 2010. Investment wise the ratio is quite similar, where the US leads with over 20 billion dollars invested in over 60,000 companies, according to Sohl in 2011.
Many of these business angels are actually former entrepreneurs themselves, looking to recreate the formula that brought them to this place. Some of them do this on a regular basis, such investors are known as “serial angels”. There are also a growth of business angel networks in Europe, where EBAN reports 400 active networks currently (compared to less than a hundred back in 2000), along with online based communities such as the Angel Investment Network.
In the spirit of passing on knowledge, or perhaps even the “pay it forward” theory, many business angels are investors that were on the other side of the fence previously. Many start up founders who have a successful business – and in many cases have sold or raised lots of capital from it, move on to other investment opportunities, and thus have a good knowledge of how entrepreneurs work, and if what they are doing is of benefit.
In fact, one recent trend is that once entrepreneurs become successful and manage to sell their company, they suddenly have lots of time after becoming so used to long hours and hard work to get things off the ground, and in some cases become unsure on what they can do, like the many stories of athletes who retire in their 30′s – many of which become trainers for instance. For entrepreneurs of the past, becoming the investor of similar companies is a way for them to keep their eye on the ball as the market continues to evolve.
Mike works with business entrepreneurs all across America and helps these new businesses connect with angel investors from across America and internationally.
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