Is it wise to become an angel investor today? Angel investment entails a lot of risk today. This is primarily because you are investing in businesses during uncertain times. Not many businesses have a promising future. And the promising ones are financed by the top angel investors in the market.
The going for a first time angel investor is unusually tough. Businesses that approach a new angel investor are usually the ones that have launched themselves newly in the market. This is because new businesses are not entertained by seasoned angel investors, who find it safe to invest in proven businesses. Investing in new businesses without understanding the industry or market dynamics can backfire sharply.
Angel investors require proper connections at the top level. They need to have good working relationship with both industry and administrative big-wigs. This is something that angel investors can only build over the years. To start with, a new investor has to climb the steep hill all alone. This makes matters much more difficult.
Unaccredited investors are likely to see fewer deals with good returns. So, it requires enormous patience to become a successful angel investor. For the first few years one has to be prepared to deal with more bad than good news. One should have buffer money to withstand the losses.
As an angel investor you cannot afford to remain out of the pack. It is important to join an accredited angel network to build good market connections. Being connected to a network can help you pool expertise and resources. This will bail you out of trouble whenever you are into a crisis. To be within this network you need to shell out around $3000 to $5,000 in annual fees. Without this support you will have to hire your own accounting and legal experts and also expend heavily on other necessities. Also if you operate independently unscrupulous business houses may take you for a ride. Taking them on by their horns can be an impossible task.
It is always good to weigh the pros and cons before you venture into angel investment.
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