For an investor, there’s no greater thrill than getting behind a promising new business early on and helping to make it a success story. Today, there are roughly 300,000 Americans who, as angel investors for startup organizations, attempt to do just that.
But breaking into the angel investing world, in and of itself, isn’t always easy. The Securities and Exchange Commission only allows “accredited investors” to participate, meaning you have to possess net assets (minus your primary home) of at least $1 million or have generated annual income of more than $200,000 for the past two years and be someone who “reasonably expects the same for the current year.” If you’re married, the minimum income level must exceed $300,000.
Even if you make it over that regulatory hurdle, having any real success usually means joining a group of other “angels” who can share the research responsibilities and split up the total investment that a company needs.
The good news for early-stage investors is that the number of angel funding groups in the United States has exploded over the past couple of decades. According to the Angel Capital Association, a trade organization, there are now three times as many groups as there were in 1999.
It still helps to have personal connections, since most of these groups allow membership by invitation only. That doesn’t mean you’re necessarily out of luck if you don’t have an “in” with any of the current members, however. Some will allow newer angel investors to participate in a couple of meetings as a guest. Once they get a sense of your commitment level and what you bring to the table, they may then ask you to join.
Most investor groups require membership fees—typically around $1,000 a year or more—and hold periodic meetings where they hear pitches from entrepreneurs in need of capital.
While attending monthly or…