Can someone explain what an angel investor is and how their websites work?

Question

Can someone explain how these investing websites work? I know the general idea is that you submit an idea and I guess you get feedback from possible investors...Is the main goal of these websites to eventually find investors for your company and "get the ball rolling" for your business venture?...What steps are in this process? And are all these companies/websites different? Some examples of sites I am talking about are www.prairieangels.org, www.robinhoodventures.com and www.commonangels.com. Anyone with knowledge or experience with these websites please let me know how they work....and what is an angel investor?...Thanks!

And if you could name any other companies/websites like these that'd be great.

Answer 1

When seeking investors, especially if you intend to go public, you will typically go through several rounds of obtaining capital.  With each succeeding round the investors invest more, but get a lesser return (the theory is that the later investors are not taking as much risk as the early investors so their return on investment isn't as good).

Angel investors are usually first or second round investors.  They all want to be like the Angel who invested $70,000 in Digital Equipment which became worth millions by the time they sold out to Compaq.

If the websites you are referring to are run by angel investors they are looking for what they feel are good investment opportunities and are prepared to sit down and write checks for several thousand dollars.

If the websites are run by brokers/agents who are looking for opportunities they can sell to the angel investors the process gets more complicated because two "sales" have to be made; one to the broker and the second to the angel.

I suspect that you will find that all of them want many things in common but that each has a set of unique requirements.

Hope this helps

Jerry-the-bookkeeper