Angel Math Case Study
1. What types of people are angel investors, and how are they different from venture capitalists?
Angel investors are high net worth individuals and successful business people who provide financial backing for small entrepreneurs or startups. They have cash, contacts and connections. They focus on helping the business success, rather than reaping an enormous profit from their investment. They are not professional but sophisticated and distinct from venture capitalists.
No two angel investors are alike and the reasons why they are also different from venture capitalists are:
• Angel investors can start up with the capital of $100k to $1million whereas venture capitalists invests around $3 million in the early stages.
• Venture capitalists compensate through salaries when they raise funds and revenue. Whereas, angel investors don’t have any compensations instead this investment is a …show more content…
Explain Angel math and the 10X formula
Angel math is an approach used by an angel investor to evaluate investments. In other words, it is an art of gambling. Suppose if an angel investor invests in a portfolio of 10 company startups. He tries to compensate losses with the profit. Even though he faces losses in other startups, he balances the loss and gain huge profit from the remaining investments. The optimistic view which he uses to evaluate is, expecting losses from 3-4 companies, modest returns from 3-4 companies and finally profits for the remaining 1 or 2 companies. They focus on higher profit ones to cover their losses.
Even though angel investors are high net worth individuals, they always try to find an opportunity to gain good returns on their investment. Most angels expect to invest in ventures where they can get about 10 times their investment. If an angel invest $1 billion dollars on a startup venture, if it is successful, by the time of sale he expects $10 billion profit, i.e., 10 times on his initial investment. This is how angel investors implement 10X
Angel investors are high net worth individuals and successful business people who provide financial backing for small entrepreneurs or startups. They have cash, contacts and connections. They focus on helping the business success, rather than reaping an enormous profit from their investment. They are not professional but sophisticated and distinct from venture capitalists.
No two angel investors are alike and the reasons why they are also different from venture capitalists are:
• Angel investors can start up with the capital of $100k to $1million whereas venture capitalists invests around $3 million in the early stages.
• Venture capitalists compensate through salaries when they raise funds and revenue. Whereas, angel investors don’t have any compensations instead this investment is a …show more content…
Explain Angel math and the 10X formula
Angel math is an approach used by an angel investor to evaluate investments. In other words, it is an art of gambling. Suppose if an angel investor invests in a portfolio of 10 company startups. He tries to compensate losses with the profit. Even though he faces losses in other startups, he balances the loss and gain huge profit from the remaining investments. The optimistic view which he uses to evaluate is, expecting losses from 3-4 companies, modest returns from 3-4 companies and finally profits for the remaining 1 or 2 companies. They focus on higher profit ones to cover their losses.
Even though angel investors are high net worth individuals, they always try to find an opportunity to gain good returns on their investment. Most angels expect to invest in ventures where they can get about 10 times their investment. If an angel invest $1 billion dollars on a startup venture, if it is successful, by the time of sale he expects $10 billion profit, i.e., 10 times on his initial investment. This is how angel investors implement 10X