The Dallas Angel Network received positive press in late 2013 for the initial investments from its fund of more than $1 million. Built up over the previous several months, the Dallas Angel Network Fund I agreed in December to supply a local start-up company with more than $300,000 and planned to disburse subsequent rounds of funding to two additional emerging companies for similar amounts over the following year.
Like many of its fellow angel investment groups, the Dallas organization factors in several items when deciding on which start-ups to fund. It looks at the competence and solidity of existing executive teams and seeks a commitment to channel funds received into growth rather than initial-stage development. Additionally, it wants to see a track record of previous funding and posted revenues even if these are modest, and at least a developing exit plan.
If you are an emergent entrepreneur seeking angel investors, you should educate yourself regarding the way these funders do business.
While angel investors may be people who are already in a start-up founder’s circle of family and friends, many others are members of formally structured investment groups. In return for a later share in a company’s profitability, angel investors offer one-time seed capital or regular support to nourish a promising small company on its way up. Wealthy angel investors can be successful professionals such as physicians and attorneys, or they may be seasoned businesspeople. The typical angel investment provides funding of about $600,000.
An angel investor must meet the standards of the United States Securities and Exchange Commission. Each must earn an income of at least $200,000 annually and possess a net worth of $1 million or more. When an angel investor puts money into your corporation in return for equity, you will file documentation of the raised capital with the SEC.
Angel investors can provide the funding to take your venture to the next level and offer valuable mentoring for you as a new entrepreneur. Be aware that angels, like venture capitalists, want to realize return on investment. The downside of this is that you may need to sell to a larger company or make an initial public offering before you want to do so in order to provide such a return.