Angel investment today entails lot of risk
In today’s economic scenario, circumstances are ripe for an investor to become an angel. As banks and other financial institutions are unwilling to invest in medium or small-sized businesses and venture capital funds have dried up considerably, angel investors have greener pastures to feed upon. With each passing day more attractive opportunities are opening up for angel investors. But it is wise not to rush through to become an angel investor.
Being an angel investor in today’s uncertain times is extremely risky. Statistics reveal that about half of all new businesses fail within first five years of operations. This means that at least half of all angel investments stand to lose money. With economists predicting a second recession, it won’t take long for markets to turn hellish. Statistics also show that the profit made by angel investors in the last few years is restricted to investors with per annum income of at least $200,000 and $1 million or more in net worth. This means about the top 10 percent of angel investors usually make the lion’s share of the profit. They happen to be well connected with -high growth industries.
Those who aspire to become angel investors need to deal with these inherent risks. The potential for high returns is remote for investors who have less capital to offer. As new entrants into this volatile sector, aspiring angel investors’, need to weigh the pros and cons carefully.
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