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Today, we're going to tell you how angel investing works. Angel investors fund startup companies in very early stages. At their best, startups can turn a $50 investment into an investment worth a quarter million dollars.
That's exactly what happened to Uber Technologies Inc.'s (NYSE: UBER) angel investors. You see, many people associate startups like Uber with wealthy Silicon Valley investors. While that was the case for many years, it's not anymore.
In fact, you don't need insane wealth to start angel investing.
Angel investing is now for anyone who wants to make significant money. As long as you have a strategic plan and $50 to invest, you can be an angel investor.
That's why Neil Patel started the Angels and Entrepreneurs Network. You don't have to be rich, famous, or connected to Silicon Valley to start angel investing.
Angel Investing Funds Startups
"Angel investor" started as a theater term. Angels were backers of theatrical productions like plays and musicals.
Over time, the market adopted the term. That's because early-stage startups need financial backing just as any musical did. Plus, you may have heard of the term "venture capital," too. Venture capitalists invest in startups as well, but with the intention of the company eventually going public. Venture capitalists also invest later than angel investors.
Once a company has reached a valuation of $5 million or more, it's ready for the venture capitalists to come calling.
Angel investing is what funds startups before venture capital.
But how do you find these companies? We'll tell you in a minute. First, let's take a look at what being an angel investor entails.
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When you become an angel investor, you're buying equity in a startup. So, it's similar to when you buy stock on an exchange.
But there is a difference. Angel investors don't purchase on public exchanges. The companies are too small to have yet become public. And with angel investing, you may be buying preferred stock or convertible bonds.
Small startups also have a higher risk than most publicly traded companies. Startups carry a lot of risk because many fail before they ever have a chance to achieve success.
But here's the potential beauty of angel investing: While there is risk, the gains can be incredible.
In other words, just one or two skyrocketing successes can more than make up for the failures.
And investors can find more winners with the right strategy.
Developing a Prudent Strategy
Since angel investing carries some risk, you'll want to use less than 10% of your investment dollars on it and diversify your startup investments. Not just one or two, either. Statistically, many startups fail. By investing in many, your odds for a home run are increased.
And the initial investments can be as little as $50.
The other step you need to take is deciding what your exit point is. Like all equity investments, angel investing gains are not realized until you sell your stake. The gains are only paper profits until you sell.
Once an angel investment starts skyrocketing, you may be tempted to see how high it can go and not sell when you should. That's why you want to establish the exit point early on.
It might be when the startup is acquired by another company or when it is taken public.
Knowing when to get out ahead of time helps you avoid costly mistakes.
But we're getting ahead of ourselves – finding the right investment is key…
Choosing the Right Angel Investments, Step by Step
Now that you understand angel investing, we want to show you how to get started with expert help.
We have two angel investors with highly successful track records. And they are going to assist beginning angel investors with finding startups poised for breakout potential. Remember, you are going to be looking for the one out of 10 or 20 that will be a big success.
When you join, you'll immediately be sent information for two impressive startups. Then, every month after that, they'll provide two additional recommendations for angel investing deals.
Throughout the process, you're given the option of attending educational meetings and networking. You can speak with other Members, startup founders, and well-known angel investors via the "Virtual Boardroom."
In the Virtual Boardroom, you can find out a startup's pros and cons. Plus, you can listen to a founders' pitch. And you can even get advice and answers to questions from angel investing experts.
The first two startups for you to invest in are ready now. These could result in wealth to pass down to your family and subsequent generations.
Just choose your membership here to begin the process of angel investing.
Anyone Can Become an Angel Investor with as Little as $50
Angel investing used to be off-limits to the average American… but Shark Tank's Robert Herjavec said it best during this live broadcast: "The walls have finally come down. You no longer have to be rich, famous, or powerful to become an angel investor!"
Congress has now made it possible for you to take advantage of these life-changing deals.
By becoming an angel investor, you can be right there – one of the first to invest in the next Steve Jobs, the next Bill Gates, or the next Elon Musk.
And because you're there at the beginning, the upside is infinitely greater.
For so long, regular folks have been locked out… but not anymore. Click here to learn more.