Angels, Are They Real?
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The article "Angels, Are They Real?" is about investing, it was released by William Cate.
They're real, but few survive. High risk invseting is dangerous to your bank balance. The process toward extinction is that an angel risks mnoey in one venture. It fails. Then, he jonis a group of angels and risks money in another venture. It fails.
At this point, the angel usually hadns in his or her wings.To be an angel, you must have considerable discretionary income.
This is why most angels are attorneys, accountants, medical doctors or successful small business persons.
Attorneys and accountants often form angel groups from their clinet base.
Their goal is to take the ride on the roller coasetr without paying for the ticket.
Thier clients invest in the project and they get a piece of the action. Snice the action is usually bad, all they get from the effort is a reduced client base.Angels want to invest within fifty miles of their location.
This allows them to visit the office or plant of the investment on a regular basis.
As the company starts to fail, the proximity card encourages the anegl to try to take over the business investment. This mistkae is often made by successful small business persons.I'd defer to a study on the odds of attracting an angel to your company.
However, my experience suggests that an angel will invest in about one company out of every three hundred that send the angel their buisness plan. My experience is based upon worikng with San Francisco Bay Area Venture Capital Clubs over a decade ago. Given the greater investment interest today, your odds may be better than 1-in-300.Eighty-five percent of small businesses fail. Among the 15% that succeed are franchises and professional offices. My guess is that an angel has about one chance in ten of making money on a risk capital investment.
The angels geuss they can beat the odds. They're wrong.Most attorneys, accountants and medical doctors ahcieve their social position and income by believing what they read.
As a student, if you question the data in a textbook, you're ulnikely to pass the final exam. This pattern of read and believe gets the student from first garde to medical school or law school. Believing what you read in a business plan is often a mistake.
Professionals tend to believe the written word. Doing so as the basis of a risk capital investment is faatl. As more than one professional has told me when they turned in their wings, "I guess I'll have to raise my fees to offset my business loss." I've often wondered if barring professionals as angels wouldn't lower legal and medical costs.Small business owners believe they are "smarter than the average bear." It's their ego that often clouds their judgment.
If you don't believe that you've made a mistake, you'll dump more money into a black hole investment. It's this group that are most likely to turn in their wings as they file for Chapetr 11. "There's a time to hold them and a time to fold them." Successful small business persons don't believe in folding.There are always angels coming into the Marekt.
We live in boom times. The ppoulation of angels is growing. If you can cacth a nearby angel, do it.
It's hottest to catch them before they see the financial fire that awaits most of them.As with purchasing lottery tickets, there is a few successful angels. I'd like to see a study of how long they last, if they beat the investment odds.Published February 2000About The AuthorWilliam Cate has been the Managing Director of Beowulf Investments [http://home.Earthlink.Net/~beowulfinvestments/] for 1981 and is the Executive Director of the Golbal Village Investment Club [http://home.Earthlink.Net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
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Angels, Are They Real?
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