This article has multiple issues. Please help improve it or discuss these issues on the talk page. It needs additional citations for verification. Tagged since October 2011. It may require cleanup to meet Wikipedia's quality standards. Tagged since October 2011.

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.^{[citation needed]}

Description[link]

Source and extent of funding[link]

Angels typically invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund.^[1][2] Although typically reflecting the investment judgment of an individual, the actual entity that provides the funding may be a trust, business, limited liability company, investment fund, etc. The Harvard report^[3] by William R. Kerr, Josh Lerner, and Antoinette Schoar tables evidence that angel-funded startup companies are less likely to fail than companies that rely on other forms of initial financing.

Angel capital fills the gap in start-up financing between "friends and family"—(sometimes humorously given the acronym FFF, which stands for "friends, family and fools") who provide seed funding—and venture capital. Although it is usually difficult to raise more than a few hundred thousand dollars from friends and family, most traditional venture capital funds are usually not able to consider investments under US$1–2 million.^[4] Thus, angel investment is a common second round of financing for high-growth start-ups, and accounts in total for almost as much money invested annually as all venture capital funds combined, but into more than 60 times as many companies (US$20.1 billion vs. $23.26 billion in the US in 2010, into 61,900 companies vs. 1,012 companies).^[5][6]

Of the US companies that received angel funding in 2007, the average capital raised was about US$450,000^{[citation needed]}. However, there is no “set amount” for angel investors, and the range can go anywhere from a few thousand, to a few million dollars. In a large shift from 2009, in 2010 healthcare/medical accounted for the largest share of angel investments, with 30% of total angel investments (vs. 17% in 2009), followed by software (16% vs. 19% in 2007), biotech (15% vs. 8% in 2009), industrial/energy (8% vs. 17% in 2009), retail (5% vs. 8% in 2009) and IT services (5%).^[5][7] Angel financing, while more readily available than venture financing, is still extremely difficult to raise.^[8] However some new models are developing that are trying to make this easier.^[9] Many companies who receive angel funding are required to file a Form D with the Securities and Exchange Commission.

Investment profile[link]

Angel investments bear extremely high risk and are usually subject to dilution from future investment rounds. As such, they require a very high return on investment.^[10] Because a large percentage of angel investments are lost completely when early stage companies fail, professional angel investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition. Current 'best practices' suggest that angels might do better setting their sights even higher, looking for companies that will have at least the potential to provide a 20x-30x return over a five- to seven-year holding period.^[11] After taking into account the need to cover failed investments and the multi-year holding time for even the successful ones, however, the actual effective internal rate of return for a typical successful portfolio of angel investments is, in reality, typically as 'low' as 20-30%.^[12] While the investor's need for high rates of return on any given investment can thus make angel financing an expensive source of funds, cheaper sources of capital, such as bank financing, are usually not available for most early-stage ventures, which may be too small or young to qualify for traditional loans.

Profile of investor community[link]

The term "angel" originally comes from Broadway where it was used to describe wealthy individuals who provided money for theatrical productions. In 1978, William Wetzel,^[13] then a professor at the University of New Hampshire and founder of its Center for Venture Research, completed a pioneering study on how entrepreneurs raised seed capital in the USA, and he began using the term "angel" to describe the investors that supported them.

Angel investors are often retired entrepreneurs or executives, who may be interested in angel investing for reasons that go beyond pure monetary return. These include wanting to keep abreast of current developments in a particular business arena, mentoring another generation of entrepreneurs, and making use of their experience and networks on a less than full-time basis. Thus, in addition to funds, angel investors can often provide valuable management advice and important contacts. Because there are no public exchanges listing their securities, private companies meet angel investors in several ways, including referrals from the investors' trusted sources and other business contacts; at investor conferences and symposia; and at meetings organized by groups of angels where companies pitch directly to investor in face-to-face meetings.

According to the Center for Venture Research, there were 258,000 active angel investors in the U.S. in 2007.^[14] According to literature reviewed by the US Small Business Administration, the number of individuals in the US who made an angel investment between 2001 and 2003 is between 300,000 and 600,000.^[15] Beginning in the late 1980s, angels started to coalesce into informal groups with the goal of sharing deal flow and due diligence work, and pooling their funds to make larger investments. Angel groups are generally local organizations made up of 10 to 150 accredited investors interested in early-stage investing. In 1996 there were about 10 angel groups in the United States.^{[citation needed]}

The past few years, particularly in North America, have seen the emergence of networks of angel groups, through which companies that apply for funding to one group are then brought before other groups to raise additional capital.^[16]

Angel investing in the US[link]

Geographically, Silicon Valley dominates the destination of angel funds, receiving 39% of the $7.5B invested in US-based companies throughout Q2 2011, 3-4 times as much as the total amount invested within New England.^[6]

Angel investing in the UK[link]

A study by NESTA^[17] in 2009 estimated that there were between 4,000 and 6,000 angel investors in the UK with an average investment size of £42,000 per investment. Furthermore, each angel investor on average acquired 8 per cent of the venture in the deal with 10 per cent of investments accounting for more than 20 per cent of the venture.

In terms of returns, 35 percent of investments produced returns of between one and five times of the initial investment, whilst 9 per cent produced returns of multiples of ten times or more. The mean return, however, was 2.2 times investment in 3.6 years and an approximate internal rate of return of 22 per cent gross.

The UK Business Angel market grew in 2009/2010 and, despite recessionary concerns, continues to show signs of growth.^[18][19]

See also[link]

• Crowd funding
• Entrepreneurship
• Pre-money valuation
• Private equity
• Seed funding
• Venture funding

References[link]

External links[link]

• WBAA directory of national angel investor associations
• Angel Resource Institute
• University of New Hampshire Center for Venture Research

v t e Topics on private equity and venture capital Basic investment types Buyout Venture Mezzanine Growth Secondaries Equity co-investment History History of private equity and venture capital Early history of private equity Private equity in the 1980s Private equity in the 1990s Private equity in the 2000s Terms and concepts Buyout Financial sponsor Management buyout Divisional buyout Buy–sell agreement Leveraged recapitalization Dividend recapitalization Venture Seed money Startup company Angel investor Venture capital financing Pre-money valuation Post-money valuation Venture round Venture debt Bootstrap funding Structure Private equity firms and funds Limited partnership Limited liability company Carried interest Management fee Publicly traded private equity Business Development Company Venture capital trust Private investment in public equity (PIPE) Pledge fund Investors Corporations Institutional investors Pension funds Insurance companies Fund of funds Endowments Foundations Investment banks Merchant banks Commercial banks High-net-worth individuals Family offices Sovereign wealth funds Related financial terms Undercapitalization Initial public offering (IPO) M&A Leverage High-yield debt Capital structure Capital call EBITDA IRR Envy ratio Private equity and venture capital investors Private equity firms Venture capital firms Angel investors Portfolio companies

Dave McClure is an entrepreneur and prominent angel investor based in the San Francisco Bay Area, who founded and runs the business incubator "500 Startups". He is often described as one of the super angel investors.^{[by whom?]}

Biography[link]

McClure was born in and grew up in West Virginia. He graduated from Johns Hopkins University in 1988 with a Bachelor of Science in "Mathematical Sciences Engineering".

Technology startups[link]

McClure founded Aslan Computing, a technology consultancy, in 1994, and later sold the company to Servinet/Panurgy in 1998. He later worked as a technology consultant to Microsoft, Intel, and other companies. He was Director of Marketing at PayPal from 2001 through 2004. He launched and ran marketing for Simply Hired in 2005 and 2006.^[1]

After leaving PayPal, McClure became a frequent investor in consumer Internet startup companies.^[2] He led the fbFund incubator on behalf of Facebook.^[3]

McClure gained attention both for his opinionated blog 500 Hats (as of 2011 one of the ten most-read blogs on venture capital finance),^[4] and as one of the so-called "Super Angel" investors^[5] involved in the Angelgate controversy.^[6][7]

500 Startups[link]

500 Startups is a business accelerator and related investment fund McClure founded in 2010.^[8] The fund admitted a first "class" of twelve startups to its incubator office in Mountain View, California in February, 2011.^[9] They expanded to a second class of 21 in June 2011, bringing the total number of investments to 140, including investments in myGengo, Visual.ly, Votizen, and Udemy.^{[10][11][12][13]}

External links[link]

• 500hats - investment blog
• 500 Startups - official site for incubator

References[link]

Esther Dyson
Born	(1951-07-14) July 14, 1951 (age 60) Zürich, Switzerland

Esther Dyson (born 14 July 1951) is a former journalist and Wall Street technology analyst who is a leading angel investor, entrepreneur, philanthropist, and commentator focused on breakthrough innovation in healthcare, government transparency, digital technology, biotechnology, and space.^{[1][2][3][4][5][6][7]} Dyson is currently focusing her career on preemptive healthcare and continues to invest in health technology.^[8]

On 7 October 2008, Space Adventures announced that Dyson had paid to train as a back-up spaceflight participant for Charles Simonyi's trip to the International Space Station aboard the Soyuz TMA-14 mission which took place in 2009.^[9]

Life[link]

Dyson's father is the physicist Freeman Dyson; her mother is mathematician Verena Huber-Dyson; and her brother is digital technology historian George Dyson.^[10] In childhood she received, for alliterative purposes only, the nickname "Dodo" (pronounced dough-dough); there does not appear to be, however, significant use of this nickname beyond her primary school experience.^[11] After graduating from Harvard with a degree in economics, she joined Forbes as a fact-checker and quickly rose to reporter. In 1977, she joined New Court Securities as "the research department",^[2] following Federal Express and other start-ups. After a stint at Oppenheimer Holdings covering software companies, she moved to Rosen Research and in 1983 bought the company from her employer Ben Rosen, renaming it EDventure Holdings. She sold EDventure Holdings to CNET Networks in 2004, but left CNET in January 2007 after CNET declined to continue her PC Forum conference.^[12]

Publications and business ventures[link]

Dyson said, "I'm flying!", 2007 courtesy Zero-G

Dyson in 2007

Currently, Dyson is a board member and active investor in a variety of start-ups, mostly in online services, health care/genetics, and space travel.^[13]

Previously, Dyson and her company EDventure specialized in analyzing the impact of emerging technologies and markets on economies and societies. She created the following publications on technology:

• Release 1.0, her monthly technology-industry newsletter, published by EDventure Holdings. Until 2006, Dyson wrote several issues herself and edited the others. When she left CNET, the newsletter was picked up by O'Reilly Media, which appointed Jimmy Guterman to edit it and renamed the newsletter Release 2.0.
• Release 2.0, her 1997 book on how the Internet affects individuals' lives. Its full title is Release 2.0: A design for living in the digital age. The revision Release 2.1 was published in 1998.
• Release 3.0, her bimonthly column for the New York Times, distributed via its syndicate and reprinted in Release 1.0 (now defunct).
• Release 4.0, her weblog. On March 4, 2005, that weblog moved to Dyson's Flickr account.^[14]

She is an occasional contributor^[15] and sits on the advisory board of a new Open Access, Open Source, Open Peer Review journal, the Journal of Participatory Medicine.

Dyson is an adviser to the First Monday journal, and an occasional contributor to Arianna Huffington's online Huffington Post as Release 0.9.^[16]

Dyson has also been a board member or early investor in several tech startups, among them TrustedID, Cygnus Solutions, Flickr, del.icio.us, Eventful, Netbeans, Powerset, Systinet, ZEDO, CV-Online, Medscape, Medstory, Meetup, Valkee and Vurve.^[13]

As of early 2007, Dyson describes herself as "spending more and more time on private aviation and commercial space startups"^[17] and also in health care and genetics. She has invested in XCOR, Constellation Services, Zero-G, Icon Aircraft, and Space Adventures. Since 2005, she has hosted the Flight School conference in Aspen.^[18] She is currently on the board of directors of 23andMe, and is one of the first ten volunteers in the Personal Genome Project. Her latest investment include: Applied Proteomics, Genomera, Habit Labs, HealthEngage, Health Loop, HealthRally, HealthTap, Keas, Medico, Medivo, Omada Health, Organized Wisdom, PatientsLikeMe, Resilient, Tocagen, Mequibrium, VitaPortal, GreenGoose, PatientsKnowBest, and Valkee.^[19]

Philanthropy[link]

Dyson is an active member of a number of non-profit and advisory organizations. From 1998 to 2000, she was the founding chairman of ICANN, the Internet Corporation for Assigned Names and Numbers. As of 2004, she sat on its "reform" committee, dedicated to defining a role for individuals in ICANN's decision-making and governance structures.^[2] She opposed ICANN's 2012 expansion of generic top-level domains (gTLDs).^[20] She has followed closely the post-Soviet transition of Eastern Europe, from 2002 to 2012 was a member of the Bulgarian President's IT Advisory Council, along with Vint Cerf, George Sadowsky, and Veni Markovski, among others. She has served as a trustee of, and helped fund, emerging organizations such as Glasses for Humanity, Bridges.org, the National Endowment for Democracy, and the Eurasia Foundation. She is a member of the Board of Directors of The After-School Corporation, a nonprofit organization dedicated to expanding educational opportunities for all students. She is also a member of the boards of the Sunlight Foundation, StopBadware, The Long Now Foundation, and a trustee of the Santa Fe Institute.

References[link]

External links[link]

Wikimedia Commons has media related to: Esther Dyson

• EDventure.com official website
• Column archive at Project Syndicate
• Appearances on C-SPAN
• Esther Dyson on Charlie Rose
• Esther Dyson at the Internet Movie Database
• Works by or about Esther Dyson in libraries (WorldCat catalog)
• Esther Dyson collected news and commentary at The New York Times
• Esther Dyson interviewed by Allan Gregg for TVOntario (1997) (See also programme information)