How do angel investors invest and what kind of profits do they expect?

As mentioned before, angel investors are mainly private wealthy individuals who invest their own money, and there could be many different reasons why angel investors invest their money in a company.

Angel investors can take much bigger risks when investing than venture capitalists and other institutional investors.

Angel investors primarily invest up to $500,000 in start-up companies and some expect a 25% return on their investment.

Many angel investors will also have several different investments to spread out their risk and opportunity. Furthermore, because angels invest their own money, their funding is very limited and you need to make sure that your projections on meeting milestones are accurate and not under estimated.

The greatest risk with angel investments is that, should you not play your cards right, you can seriously jeopardize the investment or run out of the investment capital rather quickly.

Some other angel investors like to see their investments triple within two to five years.
Angel investors are fully aware that some of their investments will fail, so they tend to calculate their risks and opportunities and will invest in largely untapped markets with a strategic defensive position.

Unlike venture capitalists, who more than likely want a seat on your board of directors, angel investors rarely seek a seat on your board of directors or demand a large number of shares in your company.

Some angel investors like to add value to the companies they invest in by either using their fund-raising skills, mergers or acquisitions and sometimes even international marketing.

Angel investors are good as first time investors because they can provide you with the first sum of capital to get your company on track.

Furthermore, many angel investors have connections with venture capitalists and other investors who can get you larger funding.
Angel investors, also known as business angels in some investment communities, also tend to be successful entrepreneurs themselves and therefore see the difficulties that new entrepreneurs face when raising the capital they need to get their companies up and running.

This is also telling in the fact that most angel investors make their investments from funds made from the profits of their own businesses.

Angels have the know-how that experienced entrepreneurs have to make a business successful and are more than likely to sympathize with an entrepreneur with whom they invest.