How do angel investors typically get the initial capital to start off in their profession?
There are very, very few “professional” angel investors (as opposed to venture capitalists, who are, by definition, professionals.)
That said, many active angel investors were themselves entrepreneurs, which is where they made their initial money that they can now invest.
In the United States, SEC regulations currently limit most angel investments to people who qualify as Acredited Investors. This means that they have at least $1 million in assets, not including their primary residence, or over $200,000 in annual income.
Because angel investing is incredibly risky, most angels do not invest more than 10% of their assets such ventures. Therefore, in the United States, it is probably fair to say that a typical angel investor has invested in between five and ten companies, in amounts ranging from $25,000 to $50,000 each. Of course there are individuals who regularly make much larger investments, and there are many more who invest smaller amounts.
*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *
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This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. Everyone's situation is different! For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.