Originally published on TCBMag.com on 2/25/22
I’ve had the privilege of hearing from countless angels about their personal journey into angel investing. The joy of these stories is the variety of ways in which people first learn about angel investing and their unique motivations to become an angel—a person who invests in startups in exchange for equity. For me personally, it was my interest in entrepreneurship that first introduced me to the concept of angel investing, but ultimately it was the idea of funding the future that prompted me to take action.
After studying entrepreneurship, management, and art (I’ve always liked options), I cut my teeth working at two different innovation centers, including the Department of Homeland Security’s Center of Innovation. It didn’t take long for me to realize innovation requires capital, and finding early-stage capital was extra challenging. This was my first exposure to angel investors. Access to capital became the cornerstone of my work for the next decade. I obtained my FINRA series 63 and 82 securities licenses and started connecting high-net-worth individuals to suitable equity investments—spanning greentech, oil & gas, senior housing, and real estate.
It would be easy to jump to the conclusion that after working in financial services and investments, I would personally gravitate to becoming an angel investor. But that would leave out the intentional steps taken to financially set myself up to be an accredited investor, which is often a prerequisite for angels. I came from a modest middle-class family, took out student loans, and have gotten laid off twice (ouch). Yet, I understood the power of financial freedom, so I stayed focused on the pieces I could control—budgeted, turned being thrifty into a superpower, negotiated equitable salaries along the way, and started to invest early in a retirement account to let compounding interest work its magic. Once I felt like my retirement account was humming along, I started to syndicate my own real estate deals with friends. Pooling money allowed me to diversify more quickly, while not tying up too much of my own cash. I knew angel investing is a higher risk and longer term investment, so I prepared and planned for it.
Amassing a lot of money has never been my personal goal. Rather I want to leverage my resources, both time and money, to leave a positive impact in my wake. Angel investing for me has been a way to advance the causes I care about, support underrepresented founders, and feel connected to the place I’ve made home—Minneapolis. Though I am early in my angel investing journey, I’ve been pleasantly surprised by the the amazing network of other local angels who share similar goals, care deeply, and continuously inspire those around them.
If you are considering getting into angel investing, there are three main ways to do so:
- As a Limited Partner (LP) in a fund
- Through an angel network
- As a solo angel
Your personal situation will dictate which path is most suitable for you, and it may change with time. Additionally, some angels choose to participate in more than one way simultaneously. I personally first started as an LP, because the investment thesis of the fund I chose resonated deeply with me. This year however, feeling ready to be more hands-on, my plan is to invest directly into startups. If you are looking for a Minnesota fund or angel group, the most consolidated list can be found on Launch Minnesota’s website.