Angel Investing is a high-risk, high-reward endeavor that sees you investing your capital into startups or small businesses, reaping the rewards should they succeed. Entrepreneurs like Nicholas Kyriacopoulos have made a great deal of profit from Angel Investing, but they do so in a controlled and calculated manner. It is essential to make sure that you enter the investment with the correct mindset and forearmed with knowledge of the business and industry.
Understanding Angel Investing
Small businesses and entrepreneurs often rely upon Angel Investing as a way of getting their endeavors off the ground. Ideally, the investor has knowledge and experience in the industry, allowing them to provide some guidance or suggestions that can benefit the company they are funding. Experienced Angel investors also benefit from providing a network of contacts that can make the difference between success and failure for a startup. If you act as an Angel investor, remember that your active involvement can help the business thrive, provided that you are not too domineering or forceful in terms of influencing business decisions.
What Does an Angel Investor Look Like?
Angel investors such as Nicholas Kyriacopoulos tend to fit a certain profile. They are successful individuals with multiple years of annual earnings over $200,000 for an individual (or $300,000 if the investor has a spouse). Their total assets come to over $1 million, which gives them the financial flexibility to provide a startup with the level of support needed. Angel investors know the industry in which they are investing and have experience in managing diverse portfolios. These investments tend to be high risk, and only those who are educated about the field and able to hedge against the risk not paying off tend to be successful when acting as an Angel investor.
Why Become an Angel Investor?
Angel Investing is a good way to diversify your portfolio. While it carries a great deal of risk, the growth potential is significant. When you fund a startup company, that business blossoming into a major success can mean that you receive a return on investment that is thousands of times greater than what you initially put in. Experts like Nick Kyriacopoulos balance Angel investing with more stable stock options that have less growth potential but are likely to grow at a predictable rate. This allows them to reap the full rewards of a good investment while moving on quickly when funding doesn’t pay off.
Challenges of Angel Investing
The biggest risk that Angel investors run is the simple fact that the majority of startups fail. Different reports suggest different percentages, but in general, 75% to 90% of small companies go under within their first few years of business. If the company in which you have invested fails early, you will be out of your investment with nothing to show for it. That is why skilled investors hedge their bets by keeping a diversified portfolio that allows them to make up for these potential losses. In short, don’t become an Angel investor unless you recognize the risk. Even if you have a strong conviction about the company, an unexpected failure is always a significant risk.
Small companies rely upon Angel to get them off the ground, and the practice allows for innovation and fresh voices in the marketplace. If you choose to become an Angel investor like Nicholas Kyriacopoulos, you should make sure that you have a good grasp of what your chosen industry entails, a strong level of trust for the people behind the business, and a plan to help mitigate your risk.