How much time and money do angel investors typically provide to startups?

3 Answers

James Duez Profile
James Duez answered

It is a difficult question to answer and it really does depend on both the Business Angel's and the entrepreneur's objectives being aligned.  What are you looking for?  What are they looking for?  When they match, you might just have a deal.

Entrepreneurs need to carefully consider the mix of time, relevant expertise and cash that they require.  You might raise as little as £5k or as much as £150k from a single Angel.  Larger sums, sometimes over £1m can come from a syndicate of Angels investing together and this is an increasing trend.

An interesting statistic.  Recent research indicates that out of every 10 investments, 6 will simply fail to return the amount of the investment, 3 will do 'okay' and perhaps 1 will return around 10 x the investment.  Angel investing is therefore high risk for the Angel, and not always as lucrative as you might expect. 

Engaging an Angel with experience in your sector, and using that sector experience can make a big difference to those odds for both of you. 

Another organisation, UK Business Angels, believe there could be as many as £18,000 Angel Investors (sometimes known as Informal Investors) in the UK. 

So, if I was really forced to judge the length of this particular piece of string, I would say that investments are commonly around £50k and supporting effort can run to perhaps a day or two a month, sometimes decreasing with time.

Kim Snowling Profile
Kim Snowling answered

An Angel Investor is an individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.  Unlike venture capitalists, Angel Investors typically invest their own money, and a Harvard Report provides evidence that Angel-funded start-up companies have historically been less likely to fail than companies that rely on other forms of initial funding.

The term 'Angel' comes from Broadway, where it was used to describe wealthy individuals who provided money for theatrical productions.

There is no set amount for Angel Investors, it can range from anything between a few thousand to a few million.  It is really down to the discretion of your 'Angel'.  They usually seek a 10% return on their investment within the first 5 years, though some reports say that setting their sights higher, 20-30% in a 5-7 year period, would be more beneficial to them.

In the UK, a study by NESTA (in 2009) estimated that there are between 4,000 and 6,000 Angel Investors in the UK, with an average investment size of £42,000 per investment.  Furthermore, each Angel on average acquired 8% of the venture in the deal, with 10% of investments accounting for more than 20% of the venture.

Despite recessionary concerns, the Angel market show signs of growth.

Taking all this into consideration, I don't think I am able to answer your question.  An Angel Investor can invest as much as they want and can contribute as much or as little time as necessary.  I think the way you have got to look at it is: they are investing their own money, so they will want to see a return on their investment. Ultimately, they will help you to make sure the business does not fail.

If you are interested in making contact with an Angel Investor, there are web-sites out there, communities of Angel Investors ready to invest.

  • angelinvestmentnetwork.co.uk
  • fundingcircle.com/angels
  • seedrs.com

Robert Lamp Profile
Robert Lamp answered

The typical angel investor is a high-net-worth individual who has an interest in helping new companies expand. These accredited investors provide startups with seed money in exchange for an equity stake in the company. The idea here is that once the company becomes profitable, the angel investor can sell their shares for a profit.

Angel investors can operate independently or as part of a larger investment group, sometimes known as a syndicate. In terms of how much money angel investors can bring to the table, it's not unusual for a typical investment to range from $25,000 to $100,000. In some instances, angel investors may be willing to part with even larger sums to assist a startup.

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