How to become an Angel Investor

Angel Investing is a high risk, high reward investment. Before you start investing, you need to understand the risk and rewards of Angel Investment.

You have to find out startups where you can invest your hard-earned personal money to get huge returns. Some of the startups may fail, however, the left out successful startups will fetch you returns to cover up all your losses and deliver 5–11 times absolute returns in 3–5 years period.

Fabrice Grinda is the number 1 Angel Investor in the World as per Forbes. He managed to get a 5.5x average return on 31 profitable exits. This is much higher than the NASDAQ returns of 1.7 times in 5 years.

How does this happen and what is the difference? As you invest at an early stage of a company, you get better valuations in compassion to applying for the IPO or buying from the stock exchange post the listing of the shares.

Here is the process and the risks involved:

1. Finding Startups: You need to build a large pool of startup applications who are willing to raise funds from you. This will cost you money for advertising and scanning a lot of startups. The risk here is that you may not be able to find the right startups or the best ones may be out of your reach.
2. Fund Requirements: You have to understand the fund requirements of the startups you shortlist and analyze that the requirements are valid and valuations are good. It won’t be a wise idea to invest alone, you should look for co-investors who can help you in your research and mitigate your risk by co-investing along with you.
3. Investment: You have to invest between $5000-$10000 in each startup. There is a risk of losing the capital.
4. Legal: You have to understand the legal process and due diligence process. You should hire good lawyers and other professionals for this process. There is a risk of losing the capital for making wrong decisions.
5. Diversification: You should invest in 5 or more startups. Don’t put all your eggs in one basket.

Now, it is not easy to do the entire process as an individual. You can become a member of an Angel Network for this. My organization StartupLanes has two Angel Investment Networks:

1. SL Angels: For Indian Investors living in India
2. NRI Angels: For people living outside India.

We have created a system to save your capital, that is not possible in any other asset class. We also ensure that you get a minimum return of 18% in 18 months. Moreover, we return your fee completely after you invest in 5 or more startups and/or invest more than the minimum amount.

Please email me directly to CEO [at] StartupLanes [dot] com to learn more about Angel Investing. Angel Investing is the best investment if you compare safety and returns of investment with all the other investment opportunities.