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Start-up Wealth

How The Best Angel Investors Make Money in Start-ups

By Josh Maher
10-minute read
Audio available
Start-up Wealth: How The Best Angel Investors Make Money in Start-ups by Josh Maher

Start-up Wealth (2015) is your guide to better investing. From momentum investors to value investors and alternative investors, the range of angel investment strategies is broad. These blinks will help you better determine which of today’s start-ups are worth your time and cash.

  • Current and aspiring investors
  • Entrepreneurs and start-up founders

Josh Maher is an investor and technology consultant. He is also the president of Seattle Angel, a non-profit organization focused on the capital market for start-ups in the Pacific Northwest.

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Start-up Wealth

How The Best Angel Investors Make Money in Start-ups

By Josh Maher
  • Read in 10 minutes
  • Audio & text available
  • Contains 6 key ideas
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Start-up Wealth: How The Best Angel Investors Make Money in Start-ups by Josh Maher
Synopsis

Start-up Wealth (2015) is your guide to better investing. From momentum investors to value investors and alternative investors, the range of angel investment strategies is broad. These blinks will help you better determine which of today’s start-ups are worth your time and cash.

Key idea 1 of 6

There are three types of angel investors; each has its reasons for investing.

Before we examine what makes an angel investor successful, let’s first define the category. Angel investors – the wealthy individuals who financially support start-up companies – come in three types: momentum investors, value investors and alternative investors.

Momentum investors are characterized by a reliance on instinct and vision. In other words, their selection technique doesn’t involve much in the way of specifics or hard data. Rather, if a momentum investor feels a connection with or is somehow engaged by a company, he will offer his support.

Brad Feld, a managing director at Foundry Group, is a leading momentum investor and has a particular approach when evaluating his gut feeling about an entrepreneurial project, that we’ll explore in depth in the next blink.

Value investors invest in companies that come to the table with solid financials. David Verrill, founder and managing director at Hub Angels Investment Group, is a renowned value investor who takes the time to investigate a company’s revenue sheet before taking the plunge. He prefers to review company data from the last 12 to 24 months, which helps him determine whether a business idea will eventually take off.

Finally, alternative investors want to do more than make an investment; they want to send a message. Rather than investing in stocks or bonds, alternative investors focus efforts on a specific business area, such as health care, antiques or even wine, to create a significant impact.

Catherine Mott, the founder of the BlueTree Capital Group and the BlueTree Allied Angels, is a good example of an alternative investor. Her organizations assist entrepreneurs in building solid businesses, with a focus on private equity investments, to ensure local start-ups receive the necessary financial support.

Let’s now take a closer look at each angel investor category, starting with the momentum investor.

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