Angel investing is the new rage. Open almost any business periodical and there is probably a story about a new company that who sought angel investors to get a business launched.  Who are these “angels” and what is angel investing?

Angel investors are individuals who invest in businesses.  Typically, angels are looking for a higher return than they would see from more traditional investments, such as stocks, bonds or even real estate. Angels are sometimes former entrepreneurs who want to help other entrepreneurs get their business off the ground. Angels invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund. However, a small but increasing number of angel investors are organizing themselves into angel networks or angel groups to share research and pool their investment capital. Angel group members must be an accredited investor as defined under Rule 501 of the SEC regulations. Funding estimates vary, but usually range from $150,000 to $1.5 million.*

In 2005, angel investors invested an estimated $23.1 billion in entrepreneurial businesses in the United States, playing a crucial role to provide start-up capital for new businesses and ultimately to create jobs. 

What are the benefits? Angel investors tend to be exited entrepreneurs and retired businesspersons who invest significant time in their portfolio companies as mentors, advisors, and members of boards of directors. Since most entrepreneurs have never run rapidly growing companies, angels bring invaluable skills and experiences to the enterprise. Some angels invest because they are looking for solid returns, anywhere from 2x to 20x their investment.  Other angels are interested in helping new technology ventures solve social problems.  Still others enjoy coaching and mentoring new start-ups, giving knowledge and advice.  No matter you're the motivation, start-up investing is economically very risky but the knowledge angels bring may improve the odds for these firms. 

Surprisingly, the vast majority of angel investors are male. In 2005, Women angels represented approximately 8.7% of the angel market. This means that the majority of new entrepreneurial ventures and their innovations are 92% funded by men which is not reflective of the collective wealth, experience and education of women generally.  Considering that women's financial power and wealth have grown in the past 20 years - approaching half of the nation's net worth - it appears women are under-represented in this type of investing and that we are missing an opportunity for new investments and perspectives, said Carl Schramm, president and CEO of the Kauffman Foundation.

A few weeks ago we held an event at Babson College, the Power Investing Roundtable for Women http://www.powerinvestingwomen.com/

This event was co-sponsored by a number of angel organizations, women's associations and colleges. It featured a keynote address by Clara Furse, the CEO of the London Stock Exchange as well as several experts on portfolio management, hedge funds and angel investing.  The event attracted more than 100 women interested in learning about alternative investments.  This suggests that indeed, there is a pool of women interested in participating in wealth creation, helping to fund new technologies and contributing to the growth of our US economy.  

*Adapted from -The Angel Capital Education Foundation (ACEF) and Golden Seeds and Jeff Sohl, Center for Venture Research, University of New Hampshire