How much money do I really need to start Angel investing?
One of the first questions I’ve been asked by those interested in venturing into the world of angel investment: how much money do I really need?
I hope what I share gives you the insight I wish I knew before starting! It’s not a simple or straightforward figure, I’ll be sharing principles for you to assess in the context of your situation. Nb. This isn’t financial or legal advice and I’d highly recommend you seek relevant advice on this front!
DO YOU UNDERSTAND THE RISK INVOLVED?
My view on angel investing is that you’re one of the first / early cheques into a company, in exchange for ownership / equity. Investment typically at this stage is at a formative time of a company where there is likely to be limited data available. Eg. There may not be product/market fit and/or they may not be generating revenue yet.
The number of startups that end up going to zero vastly outweighs the number that ‘exit’. Eg. An exit can occur via acquisition (being bought by another company), IPO (listing as a public company), secondaries (your shares are bought by another investor).
Then there’s the combination of the early stage nature of the investment and the time horizon — it could be up to a decade for any potential return. Eg. It is a…
