26 / 11 / 2019
More and more angel investors are deciding to switch from the standard angel group to online platforms in order to find their next investment, but are they worth the risk? The simple answer is, it depends.
Angel groups, or simply put groups of angel investors, are groups that convene on a regular basis where they evaluate and invest in businesses and startups. Thus, angel groups are an ideal place for the experienced angel investors that possess a wide range of knowledge on investing, are willing to invest large sums of capital, and are quite active in the investment arena. But what about angel investors without that investment capital or the knowledge? Take a look at some statistics that pointed out that the average angel investment is $39,000 in comparison with unexperienced angels who invest around $28,000. Surprised? You really shouldn’t be and this is where online platforms have become the better solution for the less experienced.
Online platforms are becoming the place to be for angel investors. For unexperienced angels, platforms that vet potential startups are the key place to start. Platforms check the potential investment and all investments are backed legally. Furthermore, investors can track all of their investments on one platform. Those angel investors that may not have years of know-how, are less active, and certainly do not want to risk their life savings will most likely find their place on such platforms. Why? For one, successful investing takes up a lot of time. Most angel investors do not have time to screen deals, conduct due diligence and then monitor those investments on top of their normal daily activities.
Secondly, many angel groups that have been formed in the last few years have less active members and few with the required experience to lead a pack of newbies. No offense to angel groups because there are a number of them with proven track records, but not all. With online platforms, angels are allowed to track the successes of the other members, see their track records, and can observe the trends.
Thirdly, once-in-a-lifetime investment opportunities aren’t always available to angel groups or they get quickly swooped up by others. Oddly enough, or maybe not, new companies are predominantly located in places such as San Francisco, Boston, and New York. You’re located in Boise? Well, you just might be out of luck if you don’t use any platform. If you are active and have time, you can travel to these places to visit potential members of the startup you are about to invest in. But let’s be honest for a moment, for less active members, that is a bit out of the question. You surely will not have the time to visit each potential investment and vet them personally. Hence, your option is to head over to an online platform to seek out new investment opportunities.
Need more information? Head over to the Gain Investors blog to read up on more tips.