The origin of the Angel Venture Investors could be traced to the beginning of the era of Broadway Productions to define those individuals who used to fight all odds to put up the high risk and early stage seed money to launch Broadway shows. In the modern world of corporate investment and financing patterns, the term Angel Investors refers to a similar concept. The Angel Investors are individuals who finance and often mentor risky young companies in exchange for equity stakes in the businesses. They are called angels because the funding they provide often seems heaven-sent at a time when the friends-and-family money is exhausted and the company has not yet developed the products or revenue to attract later-stage investors.
Angel investors have got this unique capability of analysing the potential of business, the risks involved and the possible returns. With sound financial knowledge and experience of past investment decisions, angel investors tread their path cautiously while assessing the proposals that are presented by entrepreneurs.
The decisions of the Angel Venture Investors are often based on the following parameters:
They invest in technologies or in business in the areas that are known to them.
They want to tie up funds for long periods to earn substantial returns.
They generally fund those ventures that have early stage high-risk money required to run a 10 to 20-employee firm and that can grow to a "middle market" company with 50 to 100 employees with an annual sales ranging from $10 or $20 million.
Angel investors either work as individuals making their own investment decisions or work in a closely knitted network (Angel Investor Network). According to the Centre for Venture Research based in the United States, most angel venture investors are high-net-worth investors with at least $1 million in liquid assets. The Centre has estimated that there are 300,000 angel investors in the United States and 125 formal angel investor networks nationwide. The angel investor groups give wealthy individuals and struggling companies an opportunity to meet and discuss business ideas and money.
