Why become an angel? Angels often enjoy serving as advisers, or even helping build companies as directors. The main draw, though, is the fact that seed investing – in which a company raises $500,000 to $2 million – is simply the most lucrative type of private investing.
Seed-stage returns for the first six months of last year averaged 35.4 percent, surpassing the average 29 percent return from all venture capital investing, according to research firm Venture Economics.
Angel investing is not for the average investor: To be an angel, you must be an “accredited investor,” which the Securities and Exchange Commission defines as someone with a net worth of at least $1 million or an annual salary of at least $200,000. A fat wallet is required because a typical angel will sink anywhere from $10,000 to $250,000 in a particular deal.