What is an angel investor?

Happy Halloween! Hopefully you took my advice last week and are not scrambling for candy. So far, the scariest thing this October has been the number of political texts I receive every hour. If there is a limit for blocked numbers, I will find it before November 5th. 

An angel investor is anyone who provides initial seed money to a startup in exchange for ownership equity in the startup. The investors are going off a prayer that the idea will work. Angel investors can be anyone smart (or dumb) enough to invest into an idea with a Canva logo and a name. 

We talked about venture capital a couple weeks ago. Venture capitalists are just angel investors with more experience and nicer suits. Venture capitalists can use pooled money and funds, whereas angel investors are using their own money. They both receive equity as compensation. 

Shark Tank is a panel of angel investors and a fantastic show. Unlike Shark Tank, average angel investors only invest $25,000 in a startup. Due to the extreme risk associated with angel investors, I guess $25,000 is an acceptable amount to gamble?

Seeing the potential for people to be manipulated into these high risk endeavors, the Securities and Exchange Commission (SEC) regulates who can invest into these startups. Angel investors have to be “accredited” to get access to the full range of angel investment opportunities. You can go through an official process, or you can just fill out paperwork certifying you meet the required criteria. 

Accredited investor criteria:

• $1 Million net worth (excluding primary residence) or $200,000 in yearly income 

• Or demonstrate ”financial sophistication”

You might be thinking, “how do you prove financial sophistication?” Great question, just tell them you read the Dollar Debrief.

Other ways include filling out paperwork that indicates you understand you may lose all your money, you know what you are investing in, and you have experience in other investments. That is far more boring though.

That’s pretty much it. Angel investors are individuals investing their own money into startups and ideas. Angel investors see a vision, put money into it, and then, ironically, pray it works out.

What We’re Listening To:

Interstellar soundtrack. I have seen the movie once. I have listened to this soundtrack 38 times. It is amazing background music when you are working. I don’t mean to be dramatic, but I would die for Hans Zimmer.

Debrief on Deck

Next week we have our October Monthly Market Debrief! Just a heads up, this will come out AFTER the election. However, it only covers October. So please don’t delete it thinking it’ll be another white guy telling you why Harris/Trump won/lost and that the country is ready/screwed.

As always, please reach out to us with any questions or comments you have. You can reply directly to this email or find us on Instagram.

Until then, stay the course.

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