Who Gets Angel Money?

Abstract The descriptions of the companies that receive angel money have taken on mythic proportions. Angels, it seems, are looking for everything: a high-growth market, a profitable business, an experienced team, a proprietary competitive advantage, a good business model, a well-written business plan, strong financial projections, the right financial structure, excellent exit options, and a high rate of return, among other things. Take the following example of what angels are purported to be looking for that I downloaded from one Web site: And this is the list my editor would let me reproduce because it was the short one! Some books and articles about angel investing go on for pages upon pages about the characteristics that angels are looking for, listing well over 100 different things that angels want. Before you get discouraged and think that angels are only interested in a very special group of companies that are nothing like the company that you’ve started, and certainly before you fork over $77 for a CD that will tell you all the things that angels are looking for,2 let me be the first to tell you not to worry. Angels invest in plenty of companies that don’t meet these criteria. In fact, the typical company that receives an angel investment has relatively few of the characteristics described in most articles or books on angel investing.