| |
| |
|
Investing Information |
|
|
|
Angels, Are They Real?
They're real, but few survive. High risk investing is dangerous to your bank balance. The process toward extinction is that an angel risks money in one venture. It fails. Then, he joins a group of angels and risks money in another venture. It fails. At this point, the angel usually hands in his or her wings. To be an angel, you must have considerable discretionary income. This is why most angels are attorneys, accountants, medical doctors or successful small business people. Attorneys and accountants often form angel groups from their client base. Their goal is to take the ride on the roller coaster without paying for the ticket. Their clients invest in the project and they get a piece of the action. Since the action is usually bad, all they get from the effort is a reduced client base. Angels want to invest within fifty miles of their location. This allows them to visit the office or plant of the investment on a regular basis. As the company starts to fail, the proximity card encourages the angel to try to take over the business investment. This mistake is often made by successful small business people. I'd defer to a study on the odds of attracting an angel to your company. However, my experience suggests that an angel will invest in about one company out of every three hundred that send the angel their business plan. My experience is based upon working with San Francisco Bay Area Venture Capital Clubs over a decade ago. Given the greater investment interest today, your odds may be better than 1-in-300. Eighty-five percent of small businesses fail. Among the 15% that succeed are franchises and professional offices. My guess is that an angel has about one chance in ten of making money on a risk capital investment. The angels think they can beat the odds. They're wrong. Most attorneys, accountants and medical doctors achieve their social position and income by believing what they read. As a student, if you question the data in a textbook, you are unlikely to pass the final exam. This pattern of read and believe gets the student from first grade to medical school or law school. Believing what you read in a business plan is often a mistake. Professionals tend to believe the written word. Doing so as the basis of a risk capital investment is fatal. As more than one professional has told me when they turned in their wings, "I guess I'll have to raise my fees to offset my business loss." I've often wondered if barring professionals as angels wouldn't lower legal and medical costs. Small business owners believe they are "smarter than the average bear." It's their ego that often clouds their judgment. If you don't believe that you've made a mistake, you'll dump more money into a black hole investment. It's this group that are most likely to turn in their wings as they file for Chapter 11. "There's a time to hold them and a time to fold them." Successful small business people don't believe in folding. There are always angels coming into the Market. We live in boom times. The population of angels is growing. If you can catch a nearby angel, do it. It's best to catch them before they see the financial fire that awaits most of them. As with buying lottery tickets, there are a few successful angels. I'd like to see a study of how long they last, if they beat the investment odds. Published February 2000 About The Author William Cate has been the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] since 1981 and is the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
MORE RESOURCES:
investing - Google News |
|
|
|
RELATED ARTICLES
Chinas Inscrutable Currency Strategy Purpose: Expose Opportunities for Smart InvestorsThe move by China's central bank to drop the yuan's rigid peg to the dollar on the day of my return after a three-week trip to Asia left a host of questions unanswered. The basket of currencies that will allegedly determine the value of the yuan going forward was not disclosed. How to Choose the Right Share Class You'll want to opt for the no-load or institutional share class instead. If you're a no-load investor who is determined to buy a fund that's primarily broker-sold, go through a supermarket and opt for the D shares. 5 Things To Know About The Stock Market 50% Of U.S. An Old Dividend Stock Investment Idea, for a New Generation Death and taxes! The certainties of life! And then, of course, there are the mortgage payments, the utility bills, phone bills, the car payments and thirsty automobiles. Add that to the grocery and clothing bills, and there appears to be more then just death and taxes as certainties of life. Caveat Emptor: You May Owe Taxes Despite 401(K) Losses! One among many ways you lose money in non-indexed mutual funds is the tax trap. You may have to pay taxes even when your mutual fund loses money! To many people this is painfully unexpected. New U.S. Mint Coins a Golden Opportunity In April, the U.S. Emotions: A Traders Worst Enemy; Get Rid of Fear and Greed - Youll be Glad You Did You hear it over and over and over in books, forums, and chatrooms. Fear and greed, fear and greed, fear and greed. The Convertible Craze Brightens The Future Of Equities Convertibles are stealing the show with their safe investment image in today's "protective" market. They seem to be overshadowing the stocks and bonds, and this holds true for the mediocre issuers. An Economical Retirement Investment Plan The practice of economy, directed toward a retirement investment plan in the stock market, is in itself a source of great revenue. It is the art of making the most out of every stock market investment, with the definite purpose or goal being to provide a life that is fully independent of monetary concerns. Beginning Investor - Investment Terms Over the course of the past two months, readers have brought to my attention that there is a steep learning curve for investment terminology. That's why the focus of this month's Beginning Investor column will be investment terminology. What My Horse Had For Breakfast Let's see, he had some oats, fresh alfalfa and his vitamins. I know from the mixture that is great food and he will win the seventh race this afternoon. Scots Beat Yanks in China Bank Deal With visions of an ATM in every neighborhood in China, foreign banks and investment firms are queuing up to join the "China Club."Moneybags CommunismThe initiation fee for the "China Club" is straightforward and pure moneybags communism: invest cold hard cash in its largely insolvent state-owned banks, put your reputation on the line, reassure nervous foreign investors about upcoming IPO's, and share your risk management, corporate banking and other expertise with eager Chinese executives. Angel Investors: Who They Are & When Are They Appropriate Angel investors are individuals who invest in emerging business ventures. Angels typically provide both capital and know-how to companies who are in either their start-up or expansion phases. Well Managed Investing Risks Bring Rewards! "Risk comes from not knowing what you're doing!" Warren Buffett (1930 - )We often listen to people who hesitate to invest in the stock market because they fear risk. There are older people who fear that a stock crash could leave them destitute. The Economy Is Not The Stock Market Several days ago, the Commerce Department reported that May's factory orders had increased by a 2.9 percent. How Do I Start Investing Online and What Are Some Basic Tips? If you are new to investing online, don't put your entire life savings into an online account. Start with a smaller sum, which will be easier to handle and keep track of. Time is Money and We Are Running Out of Both! One of the fundamental principles of finance is the concept that $1 today is more valuable than $1 a year from now.Making adjustments for inflation, the dollar will buy less goods and services next year. What is an Investor Ready Business Plan A Business Plan, as all good entrepreneurs starting out in life should know is the foundation, or rather a springboard, towards the establishment and growth of a new business. A business plan is an essential tool for companies raising capital - and your business plan needs to be Investor Ready. Issuing Warrants to Investors When raising capital for a business venture, warrants are a common form of equity that is given to investors. A warrant is like an option - it gives the holder the right to buy a security at a fixed or formulaic price, which is known as the "exercise" or "strike" price. Diversify! The best way to avoid being hit hard by a stock market crash or another Enron/Worldcom fiasco is to make sure you don't put all your eggs in one basket. Diversification helps ensure steady growth of your net worth as you accumulate more assets.
|
| Article List | Index | Site Map |
|
All logos, trademarks and articles on this site are property and copyright of their respective owner(s).
The comments are property of their posters, all the rest is Copyright © 2006 CanadaSEEK.com - All Rights Reserved. |
