Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups

These funds typically take investments from individuals in the range of $250,000 to $5 million. Because they have small staffs and are directed by only one or two general partners, these funds tend to specialize in particular parts of the early-stage world. For example, SocialStarts, based in San Francisco, invests in startups related to social med

One of them, however, is perhaps the fastest-growing segment of the early-stage finance world: impact investing. This involves putting your money behind companies that strive to produce social or environmental benefits for society even as they work to generate profits, equity growth, and financial benefits for investors. A

According to Josh, the goal of a seed investment is “to validate, de-risk, or disprove the entrepreneur's hypothesis as quickly and cheaply as possible.” Since the cost of starting a company was beginning to drop exponentially, this could be done with small amounts of money compared to traditional venture funds. The initial First Round Capital fund

The first venture capital fund was founded in the United States in 1946, when Georges Doriot, the Dean of Harvard Business School and future founder of INSEAD (the leading international business school) created American Research and Development Corporation with Ralph Flanders and Karl Compton (a former president of MIT), to encourage private sector

With the cost of founding a startup continuing to drop and the number of startups continuing to expand, there are a host of other seed funds that have followed in First Round Capital's footsteps, putting to work small amounts of money at the earliest stages of a company's life—precisely the stage at which angels typically invest. Because these fund

Single-holder, special purpose vehicles with a professional manager. Under this model, entities will hold the individual crowdfunded investments and aggregate them, from the company's perspective, into a single entity on the company's cap table. The professional manager of the vehicle will handle all administrative work for both investors and the c

Most angel groups and networks augment their members' personal contributions with sponsorship fees from professional service providers, such as law firms, accounting firms, or banks. These sponsorships can run into the tens of thousands of dollars annually. The

In 1884, the people of France donated the Statue of Liberty to the United States. It was a gift of the heart, but it came with a condition: the United States was required to fund construction of the pedestal on which the statue would stand. When the U.S. Congress and New York State declined to allocate money for the project, newspaper publisher Jos

Angel groups are in the middle between the two extremes. Unlike individual angels, they make themselves available to entrepreneurs (including having a website, soliciting funding applications even from entrepreneurs they don't personally know, running events, and so on), but unlike venture funds they typically receive hundreds of applications a yea