Angel Investing 101: snapshot of an angel investor

Who would you say is the most famous angel investor of all time?

To Ellen Weber, executive director of angel investor group Robin Hood Ventures, it’s the man who sold Babe Ruth to the New York Yankees in 1920 in order to finance a Broadway musical. His name was Harry Frazee.

“But in my house, his name is mud,” Weber joked at this year’s Regional Affinity Incubation Network conference, perhaps referring to the Curse of the Bambino.

At the conference, Weber offered a quick rundown of your typical angel investor and what angel investing looks like in the region. She called it “Angel Investing 101” and we took notes. Find them below.

• There are about 10-15 angel groups in the region, with anywhere from 30 to 100 members. To name a few: Keiretsu Forum MidAtlantic, Jumpstart New Jersey Angel Network, Minority Angel Investment Network, MidAtlantic Angel Group and, of course, Robin Hood Ventures.
• Angel investors are usually accredited investors, which means that they make at least $200,000 a year or have a net worth of $1 million.
• Angel groups generally invest between $250,000 to $500,000 in a startup. For very early stage companies, like those coming out of accelerators, Weber said she’s seen deals smaller than $250,000.
• Most angels expect a 10x return, but they hope for a 20x return over five to seven years.
• Angels will usually have about ten companies in their portfolio. Weber used a baseball metaphor to explain how an angel’s portfolio breaks down: she’ll usually have about four singles, two doubles and one home run. The rest will go under, and you hope that they go under sooner rather than later.
• Angel investors are often entrepreneurs who are no longer interested in the day to day operations of a company. They’d rather be in an advisory position. Additionally, they don’t usually come from inherited money.
• Angel groups in the Philadelphia region don’t usually do deals alone. Three or four groups will get together for a deal.
• “Venture capitalists never buy us out,” Weber said with a smile.

For more, read Robin Hood Ventures’ FAQ on angel investing [pdf].