Keep Your Angel Wings From Being Clipped
“You get to play God a little.”
Previously, we discussed the pros and cons of participating in crowdfunding activities when the JOBS Act is enacted. However, if you’re an accredited investor, defined by the SEC, among other definitions, as either having a net worth of $1 million or an annual income of $200,000 for individuals or $300,000 for couples, then your opportunities to potentially catch rising stars at the ground floor increases, as you’re able to invest in private offerings (including hedge funds) and don’t have some of the limitations that the S.E.C. (the Securities and Exchange Commission, not the Southeastern Conference…go ACC!) puts on regular retail investors. When you hit that $1 million threshold, you’ll also probably be exposed to some more opportunities to invest in these small companies than you might not otherwise be exposed to.
Just because you can invest in angel opportunities, does it mean that you should?
The numbers don’t bode well for angel investors. According to the Wall Street Journal, only 7% of angel investments went up tenfold. In general, angel investors are trying to play venture capitalists, except that venture capitalists have institutional funds backing them, not to mention expertise and networks that all but a few angels lack.
Are you still itching to try your hand at being an angel investor? Here are some tips to think about before you stroke a check to a company.
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Jason Hull is a Fort Worth fee only, hourly financial planner who serves clients in Fort Worth, TX and Dallas, TX as well as serving clients nationwide.
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Hull Financial Planning is a Fort Worth, fee-only hourly financial advisor. The cities we serve in the Dallas-Fort Worth area include:
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