What is angel investing ?
We realize that many persons are not familiar with angel investing. This list of frequently asked questions is aimed at entrepreneurs who are curious about the angel investment process in general and about FirstAngelsJA specifically.
If you are an investor interested in learning more about FirstAngelsJA, we have a separate FAQ page specifically for investors.
What is an angel investor ?
An angel investor is a high net-worth individual who invests directly into promising entrepreneurial businesses in return for equity in the companies. FirstAngelsJA members must meet certain net-worth and income requirements in order to qualify as “accredited investors”. Angels are not just investors but also play key roles as advisors and mentors, helping to grow entrepreneurial companies; contributing their wisdom and expertise in nurturing entrepreneurs and their companies. Their interest is not solely in making money but in so doing, fulfilling their social responsibility by investing in and supporting entrepreneurial ventures, not just locally but also regionally. FAJ’s vision is to tap into the growth prospects of the wider Caribbean region.
What is an angel network?
Sometimes also referred to as an “angel group”, an angel network is a group of many individual angel investors who join together in order to evaluate and invest in entrepreneurial ventures. The investors can pool their capital to make larger investments, use standardised legal agreements, and benefit from the shared interests and experience of the larger group.
What kind of companies of members of FirstAngelsJa invests in?
The members of FirstAngelsJA looks for innovating start-ups that can grow quickly in sales and value, creating jobs along the way. The entrepreneurs leading these companies should be planning to ultimately “exit” the company either through a merger, acquisition, or an IPO. Famous examples of angel-backed businesses include Google, Facebook, and Starbucks. Many angels prefer to invest in companies located in their communities and in industry sectors in which they have extensive experience or knowledge.
How do I know if my business is right for angel investment?
Angel investment is the right source of funding for only a small proportion of businesses. Here are some good questions to ask yourself when considering raising money from angel investors:
- Am I willing to give up some amount of ownership and control of my company?
- Can I demonstrate that my company is likely to realise significant revenues and earnings over the next few years?
- Can I demonstrate that my company will produce a significant return for investors?
- Am I willing to take advice from investors and accept decisions from board members that I may not always agree with?
- Do I have an exit plan for the company which may mean that I’m ultimately not involved?
When should I approach FirstAngelsJa?
In general, the best time to seek angel funding is when…
- You have existing customers or potential customers ready to buy your product or service.
- You are in the stage of development in your business when outside shareholders are able to add significant value through their industry knowledge, experience, connections, or mentorship.
- You are 100% committed and dedicated to your venture (that is, you want to make it your full-time job).
- You can demonstrate that the business is likely to grow rapidly over the next few years.
That said, members of FirstAngelsJA do invest in seed stage ventures which may not already have generated revenue but whose Founders can convince them that the business is innovative and has great potential for revenue, profits and growth.
I’m a new entrepreneur. Do you have recommendations on how I should get started?
We would encourage you to first make maximum use of the resources that are available to you for free. On our Resources page of our website we have a lot of information and external links that should be useful to you.
You may also wish to consider contacting a business counselor or development organisation to help you think through the right kind of financing for your business.
How does the FirstAngelsJa Investment Process Work?
Typically, the process involves…
- You apply via our website, www.firstangelsja.com
- Your application is screened by the Manager
- If the venture looks like one that members might be interested in, a face-to-face or telephone/Skype meeting is arranged by the Manager with the entrepreneur
- The entrepreneur may be invited to attend a 1-day training session
- The Manager reviews the business plan and pitch and may provide coaching to help make improvements
- You may be invited to make a pitch presentation to the Angels and field questions
- If the Angels agree to invest, a due-diligence investigation of your company and your team begins
- If the due diligence is positive, negotiation of the investment terms and valuation begins
- If the negotiation is successful, the Manager issues a “Capital Call” to the members
- The deal is completed and the fun begins!
It is important to bear in mind that at any stage along this process, the Angels may decline to invest in your venture, for one reason or another.
Meet Michael Claire, CEO of LoanCirrus Limited, a cloud-based lending management software. LoanCirrus’ connection with FAJ is a little different from the other companies that have received investment, in that Michael is actually an associate member of the angel network. #FAJ