Angel Capital

Angel Capital

Angel capital is a direct investment in entrepreneurial enterprises by wealthy individuals in their own names, so it is not A venture capital fund institution with the nature of a “collective investment system” jointly funded by a majority of investors. Therefore, it is a typical “unorganized venture capital”.

The reason why angel capital is directly invested by investors is that firstly, this type of investors usually have both a certain degree of capital strength and a certain understanding of the enterprise; secondly, because their investment is in a large number of companies. The purpose is not to obtain investment income, but to experience the passion for adventure and the sense of social honor after successful investment.

　1. Former entrepreneurs;

2. A rich man in the traditional sense;

3. Senior managers of large high-tech companies or multinational companies.

Angel capital is a form of equity capital. Angel investment, like venture capital, is an act of exchanging capital for ownership of shares in a startup. The European and American angel capital market is an equity financing market that is different from the securities “main board”, GEM and over-the-counter trading markets. Due to its characteristics of high risk, high return and freedom from strict supervision, it only invests in trusted investments with high risk resistance. It is open to people (commonly known as angel investors, business angels or wealthy investors), so it is called a restricted stock exchange market (Limint-ed Stock Exchange). Currently, angel capital activities are also spread across Canada, Australia and New Zealand. Among them, American angel capital is the largest and most active, followed by Europe.

1. Angel investors in the United States

The word “angel” was first used to describe wealthy backers of Broadway shows. Later it was used to collectively refer to wealthy investors, who are legally known as individual fiduciary investors (commonly known as angels). investor). Their personal assets must be more than $1 million, or their personal annual income must be more than $200,000 (and their joint annual income with their spouse must be more than $300,000). These are people who have more than a certain amount of net discretionary wealth, excluding homes and cars. Currently, there are about 2.6 million individuals or families in the United States who qualify as individual accredited investors, of which about 300,000 are active angel investors. They are willing to invest in high-risk projects, are proficient in financial management, and are willing to support small and medium-sized enterprises in their early stages. Businesses or entrepreneurs (hereinafter referred to as start-ups) provide seeds and entrepreneurial capital. In essence, they are informal private entrepreneurial investors, and the angel capital market is therefore called an informal entrepreneurial capital market.

2. Development of regional angel capital market

In the 20 years before 1996, the regional angel capital market in the United States, led by the East and West Coast, developed rapidly. Angel investors, institutional venture capital funds, and local universities (especially Stanford University and MIT) in the two high-tech industrial belts of Silicon Valley and Boston’s Route 128 have formed very close ties and developed into a unique Entrepreneurship environment, that is, knowledge service providers (such as banks, law firms, accounting firms) and investors and entrepreneur groups are interdependent and jointly participate in technology entrepreneurial activities. The above-mentioned parties initially established informal contacts and later established more formal regional networks. They operate in the form of non-profit organizations and are committed to capital formation in the region and meeting the various needs of start-ups. They assist angel investors and entrepreneurs to strengthen connections through a variety of methods, including various dinner parties, financing seminars, large-scale Forums and computer-based network services, etc. In addition, they provide management and entrepreneurial coaching services to angel investors and entrepreneurs, and some of them have also become service providers for state government seed funds and other funded operations. After 5 to 20 years of development, these institutions have made great progress in networking and education and training, and have established reliable credibility among angel investors and entrepreneurs. Currently, there are more than 3,000 business communication network systems, 100-150 venture capital clubs, more than 10 famous venture capital forums, more than 20 famous computer investment matching networks, and more than 20 famous Internet electronic networks in the United States. The efforts of the above-mentioned institutions have created good conditions for the establishment of a national market.

3. Establishment of a national angel capital network

In October 1996, in order to solve the problems of cost and benefit in the regional market, the federal government headed by President Clinton established the Angel Capital Electronic Network, whose role is to facilitate institutional trusted investment. (such as venture capital companies, non-bank financial institutions, etc.) and individual angel investors to discover investment opportunities across the country; second, to attract 350,000 rapidly growing small businesses in the United States while complying with federal and state securities management regulations. The third is to provide new channels for investors to find angel capital for projects receiving R&D funding such as the Federal Small Business Innovation Research Fund, and the fourth is to make some attractive tax incentives applicable to investors in the angel capital market. Angel Capital Network is considered a new national equity quotation market due to its typical institutional innovation characteristics. It focuses on filling the funding gap of start-up companies between US$500,000 and US$5 million. It is characterized by government departments and non-profit organizations (all over the country). network operators), combine the advantages of “public offering” and “private offering” in securities supervision, adopt the method of combining “tangible market” and “intangible market”, and achieve the organic unity of social benefits and service efficiency through Internet technology , is therefore considered to be the product of institutional innovation in the U.S. technological innovation system, securities supervision system, tax management system and small business service system. In April 2000, after nearly four years of operation, Angel Capital Electronic Network was transformed into a non-profit organization through strict certification procedures. The establishment of the Angel Capital Electronic Network not only reflects the determination of the U.S. government to develop start-up enterprises, but also shows that the angel capital market has obvious strategic significance for improving the small business service system.

4. The energy of angel capital

In the past 20 years, more than 600,000 small businesses have been born in the United States every year. Small businesses employ nearly 60% of the labor force, account for 54% of total national sales, 40% of gross national product, and private sector output. 50% of them and have created more than twice as many important innovations as large companies. After 20 years of research by the National Natural Science Foundation of the United States, it has been proven that for every dollar spent on research and development, the number of innovations produced by small enterprises is four times that of medium-sized enterprises and 24 times that of large enterprises. 80% of the new wealth in the United States comes from Small business. Companies such as Apple, Microsoft, and Netscape have successfully created a series of emerging industries from small to large in a very short period of time. The prosperity of small businesses became an important factor in the US economy maintaining steady growth (average annual growth of 3%), low inflation and low unemployment (less than 5%) in the 1990s. Among them, angel capital has contributed a lot. The latest results show that there are about 250,000 angel investors in the United States providing funds to about 30,000 start-ups every year, with a total capital of about 20 billion US dollars. The average financing volume of each small business is about 660,000 US dollars, and each angel investor invests about 8 Ten thousand U.S. dollars. This is roughly equivalent to twice the annual investment volume of institutional venture capital funds and 15 times the number of small businesses receiving venture capital.