Tags: Rose | angel | investing | risks

NYT: Angel Investing Carries Big Risks, Big Rewards

By    |   Monday, 05 May 2014 01:17 PM

Angel investors can reap a juicy payout if they hit a successful company like Facebook or Instagram, but remember that approximately 80 percent of start-ups fail.

Angel investors provide money for entrepreneurial businesses. These "angels" are often part of the founder's friends and family.

One believer in angel investing is David Rose, a renowned angel investor in New York and author of the book "Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Start-Ups."

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He writes in his book that you can achieve 25 percent annual returns by setting up a portfolio of at least 20 different companies in which you invest $25,000 to $50,000 each, The New York Times reports. That could take years, Rose says.

"They also need to have at least half of that amount held in reserve for additional investments to either prop up a struggling company or maintain the same percentage stake as the investor base expands," The Times adds.

But some experts are skeptical in any case. "There is a lotto ticket element to angel investing," Michael Tiedemann, chief investment officer at Tiedemann Wealth Management, tells The Times.

"The risk is most people are not going to see the best deals unless you are really well connected in the industry."

Even Rose advises limiting your angel investing to 10 percent of your total portfolio.

He's apparently not the only hooked on angel investing. The angel investment market expanded in 2013 for the fourth year in a row, according to the Center for Venture Research at the University of New Hampshire.

Total investments rose 8.3 percent last year to $24.8 billion, it says. A total of 70,730 entrepreneurial businesses garnered angel investments in 2013, up 5.5 percent from 2012.

Editor's Note: 250% Gains Bagged Using Secret Calendar (See Video)

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Angel investors can reap a juicy payout if they hit a successful company like Facebook or Instagram, but remember that approximately 80 percent of start-ups fail.
Rose, angel, investing, risks
309
2014-17-05
Monday, 05 May 2014 01:17 PM
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