It is often thought that you have to be very wealthy to be a Business Angel, but in fact many start with investments from around 10.000 €. But remember that your money likely will be tied up for several years so it must be money outside your normal financial needs. Business Angels invest in more than one company to give a spread of opportunities to diversify their risks. In fact, it is recommended that you invest in at least ten companies to avoid too much risk.
As well as investing money, Business Angels also bring valuable know-how, contacts and experience to the businesses in which they invest. We talk about “smart money” when referring to Business Angels and other active and professional investors. Personal investment strategy Business Angels need to be active in looking for good cases. In order to be able to look efficiently from the start, a clear focus should be defined. It is a good idea for a Business Angel to clarify his/her personal investment strategy in the very beginning.
Also take into account that in most cases the business plan will not happen as expected and the surprises tend to be negative ones. Therefore an additional round (or several) of financing with similar valuation than the initial one is very normal, even though not anticipated in the business plan. You should reserve some of your planned investment for the target company to these later rounds.
The degree of Business Angels’ engagement can vary according to their personal availability and liking, ranging from being a lead investor down to a more passive role.