What is Angel Investing?

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ANGEL INVESTING 101

Why angel investing?

Angels invest to make money.

They believe they can get a solid return on their investment, outpacing the public market.

Angels invest to see the impact made.

Every cent invested, piece of advice offered, or introduction made can have a direct impact on the success of these early-stage companies.

Angels invest to work with the best and brightest.

They have the opportunity to not only work with entrepreneurs, but also with successful investors who have a passion for investing in startup companies.

The amount of business knowledge in the group is invaluable in my career going forward. Cowtown has given me the chance to learn from experts in an array of industries, and helps me make sound investment decisions. Also, working with startups brings a level of excitement that is hard to find. It is enjoyable to assist in creating something new and help guide how the market chooses to adopt it.
Mike B., Member
What is an angel investor?

An angel is a high net-worth individual who invests in startup or early stage companies in exchange for an equity share. All Cowtown Angels members must be accredited investors, meaning they must meet one of the following criteria:

• Have individual or joint net worth that exceeds $1,000,000 excluding the value of one’s primary residence
• Have an income exceeding $200,000 in each of the two most recent years, or joint income exceeding $300,000, and a reasonable expectation of the same income level in the current year

For more information on accredited investor criteria, please refer to the SEC Guidelines.)

What is angel investing?

Angel investing is a unique stage of private equity funding. Typically, angels invest after entrepreneurs have invested personal funds and exhausted resources from friends and family to start their businesses. Before a venture has reached later stages, where they may appeal to venture capital firms, angels provide the critical funding to truly bring an idea to market.

While there is a potential for high returns, angel investing can be extremely risky. As a result, many angels seek membership within an angel group where they not only have access to better deal flow, but can also leverage the expertise and experience of other angels within the group. This leads to a higher quality due diligence process and eventually to better deals. More importantly, angels are able to invest smaller amounts in a greater number of deals to develop a diversified portfolio with attractive returns, while entrepreneurs are still able to acquire the necessary amount of capital.

What is an angel network?

An angel network is an organization made up of members interested in investing in startup and early-stage companies. Members pay annual dues in order to gain access to high-quality investment opportunities beyond their individual network and participate in the angel investment process.

It is important to note that Cowtown Angels is not a fund and does not invest as a group. Members collaborate on due diligence and pool investment funds to create critical mass. Each member, however, makes individual investment decisions and understands that investments in early-stage, privately held ventures are risky and can be highly illiquid. Typical angel investments can take years before capital is returned and, in some cases, the company goes out of business and no money is returned.

How does the angel investment process work?

Please see our Funding Process.

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