How to invest in venture capital?

28th Nov 2009 by Tobias John Sterling

Individuals (as opposed to institutions) who provide venture capital to venture capital firms are always high net worth due to the amounts of money involved. This world is more or less completely inaccessible to the average investor with more modest means. But a closely related type of investment is 'angel' investment. Angel investors invest their own money (as opposed to a pool of money from other sources, as venture capital firms do) into business start-ups in return for (usually) a share of the ownership equity. This funding often fills the gap between the maximum amount of money that a new company might be able to raise from friends and family, and the minimum amounts of money that venture capital firms are will to invest (typically $1-2m). Consequently, the amounts of money involved are typically around the $500k mark -- that is, the company might receive that much capital from angel investors in total, with each individual angel investor contributing something like $50k. Today it's very common for angel investors to form themselves into groups or networks in order to share information and pool capital. Anyone interested in being an angel investor should seek out one or more of these groups/networks (do a search online) for further information on the best way to proceed.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com