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Title: Angel Financing: How to Find and Invest in Private Equity by Gerald A. Benjamin, Joel Margulis ISBN: 0-471-35085-0 Publisher: John Wiley & Sons Pub. Date: 19 October, 1999 Format: Hardcover Volumes: 1 List Price(USD): $49.95 |
Average Customer Rating: 4 (7 reviews)
Rating: 5
Summary: Great Book For Entrepreneurs And Investors
Comment: I think anyone interested in investing in private companies or anyone who wants to understand the process of angel investing should read "Angel Financing"
Many wealthy investors are turning to financing small businesses due to the huge potential return. Benjamin and Margulis tell us that the angel investor who put $100,000 into Ciena Corporation saw the value of his investment grow into $285 million in three years, when the company went public. Further, knowledgeable business people can enhance the value of their angel investments through their experience, knowledge, and contacts. Unless you're extremely wealthy, this ability to add value to your investments isn't available when you invest in large publicly-traded companies.
Angel investing isn't for everyone. Benjamin and Margulis say angel investors expect about one-third of their investments to fail completely. Further, many bad deals out there must be avoided. So, anyone considering angel investing should have business experience. And, there must be good chemistry between the investor and the entrepreneur.
To help new investors ask the right questions and avoid bad investments, Benjamin and Margulis provide a detailed due diligence questionnaire which will help investors understand what questions they should ask before making an angel investment.
"Angel Financing" is also a good book for entrepreneurs seeking angel financing. It helps entrepreneurs answer the questions: "Is my company financeable? Am I financeable?" And, "Angel Financing" helps entrepreneurs understand the private equity market.
We learn that the average angel investor is 48-59 years old, has a postgraduate degree, has management experience, and, typically, invests between $25,000 and $250,000 per deal. Many angel investors are self-made millionaires with a net worth between $1 million and $10 million dollars. Eighty percent of angels have previously started a company and have small business experience.
Benjamin and Margulis tell us that seeking private investments from people with a net worth below $1 million, or an annual income below $200,000, isn't usually desirable. These people do not possess the discretionary income to make angel investments and are usually not classified as accredited investors. This could create legal problems for the entrepreneur if the investment fails.
Benjamin and Margulis point out that many of the wealthiest families and individuals have their wealth managed by conservative trusts or professional advisors. So, seeking an angel investment from an ultra-rich person may not prove successful, because the trust administrator often kills the deal because of the high risk involved.
Because angel investors don't need to invest, Benjamin and Margulis tell entrepreneurs to be flexible in structuring the deal to meet the investor's needs. Many entrepreneurs do not listen adequately to what potential investors are telling them.
"Angel Financing" contains a good appendix about private placements, discussing such things as exemptions from full securities registration under Rule 504, 505, and 506, although much of this information is also available free from the SEC.
Benjamin and Margulis say that entrepreneurs should expect to budget about 10% to 15% of the amount to be raised as fundraising expenses. We learn that costs of a SCOR offering average about $30,000 nationwide. (SCOR, Small Corporate Offering Registration, allows companies to raise up to $1 million and is highly state-specific. Some states encourage SCOR while other states are more hostile to it.)
Overall, "Angel Financing" is an excellent book for entrepreneurs and angel investors.
Peter Hupalo, Author of "Thinking Like An Entrepreneur"
Rating: 5
Summary: Get it Right the First Time (do your homework too)
Comment: There are many books in the marketplace that target different types of entrepreneurs with different types of approaches. Respectively, none of them work unless you are starting a mom-and-pop business. Believe me, I've gone through most of them! I have found that they are either based on a fandango "boilerplate business plan" model or written by beings from outer space, with grand delusions that your idea will rivet the attention of a venture capital firm or an investment banker. Forget it, those days are gone.
If you are serious about finding and raising private equity for your start-up company, this book will give you plenty of facts, stories and anecdotes. Angel Financing will also give you the methods and processes to get it done properly.
Promote your idea into a practical one. This book is pure common sense. Write a business plan to attract financing. The blueprint for operating your company is the next step. Look around and discover that Gerald Benjamin is a pioneer in this field and his views about how to raise private equity is gaining a foothold and turning heads. Recently, I attended one of his seminars and the people sitting next to me were simply top-caliber entrepreneurs.
There are very few companies that will ever make it to the public equity markets. For example, many large companies such as SAIC (headquartered in San Diego) are employee-owned. Just look at the facts presented in his book and reconsider your options, especially if you would like to retain control of your start-up.
There is one suggestion. Carefully review all the how-to-do a business plan material out there. Make sure it is suitable for your exact needs
Good luck!
Rating: 3
Summary: Long winded, but worth a good skim
Comment: This book could easily have been cut by 100 pages or more without losing any information. The author says the same thing over and over and over and over again, almost as if he was being paid by the page (or trying to justify the high price with a thicker book). I did learn from it, but was annoyed skimming entire sections to simply reread what he's already said five times.
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