What are angel investors?

Entrepreneurs are often looking for investors to fund their business. And at the same time, investors are keen on spotting the next big business that they can invest in. Investors can pour in millions of dollars to finance businesses that they deem would be successful, given their overall marketing plan and the feasibility of the endeavor. According to Scott Tominaga, there are many types of investors looking for businesses to support. There are venture capitalists, peer-to-peer investors, personal investors, as well as banks. One other type of investor is the angel investor.

Image source: startupnation.com

Image source: virgin.com

Often, angel investors are high net worth individuals who are looking for a startup or entrepreneurs to support. Like most investors, an angel investor may choose to give a one-time investment package or choose to inject funds to a business regularly provided their terms are kept.

Unlike venture capitalists who use pooled resources, angel investors rarely shell out 7-digit figures. They would, on average, invest $300,000 in a startup with an ROI of 20 to 25%. The terms they put out are often reasonable as their main goal is to promote innovation that translates to economic growth in the long haul.

To become an angel investor, one must first comply with the Securities and Exchange Commission’s terms such as having a net worth of $1 million in assets or having earned $200,000 in income over the past two years, or those with a combined income of $300,000 for married couples. According to Scott Tominaga, one doesn’t have to be an accredited investor to become an angel investor.

Scott Tominaga earned his B.S. degree in Business Finance from Arizona State University in 1988. An experienced professional in the hedge fund and financial services industry, his skills involve expertise in middle and back-office, accounting, compliance, and administrative functions within financial services firms. For more reads on finance and investment, visit this blog.