David Rose is third generation serial entrepreneur as well as a third generation angel investor. Starting in the late 19th century, his grandfather was angel investor for medical equipment like the first portable kidney dialysis machine. David Rose grew up surrounded by innovation and spent the first part of his life starting businesses, beginning in high school. The instability of the market caused him to quit entrepreneurship and start angel investing. He has invested in about 110 companies, most of them located in the United States. He explains that international investing is just starting to become big, but it is still legally very difficult.
His book Angel Investing was published in 2014, in which David Rose details how to make money and have fun while investing in startups. During an interview with Rodrigo Sepulveda Schulz, he explains that to become an angel investor, a person must have accredited investor status. Accredited investor status requires $1 million in assets, not including property value, or $200 thousand per year as steady income. This is to keep people without the proper financial means from making too risky of business decisions, because angel investors spend their personal money. Someone who wants to invest but does not have the financial security could look into venture capitalism.
When it comes to the decision process of whether or not to invest in a company, a few decisions come quickly but most angel investors do extensive research and background checks on the candidates. David Rose judges if a startup is worth his investment by whether the business is still in its early stages, before any real profit or revenues have been made. He also looks at the person running the startup, and uses the expression “betting on the jockey not the horse” to explain that angel investing requires a good entrepreneur who can get the product or company to where it needs to go. Because in the early stages of a company there are so many unknowns, angel investors look for entrepreneurs with trust, integrity and personal drive.
Depending on the startup, there are different places around the country to get funding. Silicon Valley in California is great for technology. It was built with technology as its only focus, and provides a great community for people interested in that type of startups and investments. New York City is the second best place for entrepreneurship because it offers a little bit of everything.
Angel investors can be found around the world and are often very similar and will make similar decisions. While it is good to pitch a product or business to different investors, if one provides feedback about how to make the startup more enticing, it is likely others will offer the same advice too. Thus, it may be worth it to spend time and adjust the business plan based on the feedback before trying again.