Fool's Gold - The Truth Behind Angel Investing in America (see also my blog at

This book is essential read on angel investing for investors, entrepreneurs, and public policy makers.

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Fool's Gold - The Truth Behind Angel Investing in America (see also my blog at by Mind Map: Fool's Gold - The Truth Behind Angel Investing in America (see also my blog at

1. Angel investing is 8% of all informal investing

2. Market size

2.1. Angel investments = VC investments

2.2. Angle investments is 14% of all informal investments

2.3. 3% of M&A market

3. Types of investors

3.1. Accredited

3.2. Non-accredited

4. All variations

4.1. Sophistication

4.1.1. Naive

4.1.2. Knowledgeable

4.2. Role

4.2.1. Passive

4.2.2. Active

4.3. Investment stages

4.3.1. Early stage

4.3.2. Later stage

4.4. Investment size

4.4.1. Small

4.4.2. Large

4.4.3. Median 10,000 USD

4.5. Instrument

4.5.1. Debt

4.5.2. Equity

4.6. Risk level

4.6.1. High

4.6.2. Low

5. Typical Angel Investor

5.1. Not especially wealthy

5.2. Not especially well-educated

5.3. Not especially old

5.4. Not necessarily male

5.5. Not former entrepreneur

5.6. No difference to typical Friend's and Family Money

5.7. No more startup experience than F&F investor

5.8. Makes less than 1 investment per year

6. Motivations to invest

6.1. To remain involved in the start-up scene

6.2. To learn something new

6.3. To find a job

6.4. As a hobby

6.5. To make money

6.6. To give back to the community

7. Added value

7.1. No added value

7.1.1. There are few exceptions

7.2. It's just money

8. What should government do

8.1. Angel groups

8.2. Also NON-accredited investors

8.3. Startups are born where there are other startups, entrepreneurs, and respect

9. Is there a problem

9.1. There aren't enough (growth) entrepreneurs

10. Role of Angel Investors

10.1. They do not fill the "gap" between F&F and VC

10.2. Having angel investment does not make getting VC easier

11. Investment process

11.1. No complex contracts

11.2. Typically no DD

11.3. Gut feeling valuation

12. Typical investment target

12.1. Also service business

12.2. Typically not high-growth business

12.3. Not only high-tech

12.4. Later stage

12.5. Often home-based

13. Typical startup

13.1. No complete management team in place

13.2. Older entrepreneurs than in media

13.3. More educated

13.4. Often solo entrepreneurs

13.5. Often not even only startup, 100% focus on one company not needed

14. What should we do

14.1. Entrepreneurs

14.1.1. 1. Avoid believing "specialness" of angels as a category of investors No "value difference" to F&F

14.1.2. 2. Understand the true alternatives, such as banks and boot-strapping

14.1.3. 3. Develop an accurate profile of angel investors

14.1.4. 4. Understand what angels are looking for - no need to be next Google

14.1.5. 5. Have a realistic sense when one can get angel money It's much later than one thinks (hopes)

14.1.6. 6. Be aware that raising money as a process is typically haphazard

14.1.7. 7. Understand what you can get out of angels It's just money, actually

14.1.8. 8. Not all angels are the same - a small minority can provide more than just the money

14.2. Angels

14.2.1. 1. Have realistic earning expectations

14.2.2. 2. Ask yourself why you want to make angel investment

14.2.3. 3. Have realistic expectations of what you will get in return

14.2.4. 4. It's not difficult to become an angel investor "All you need to do is find somebody who needs money and write a plain vanilla contract to provide the funds that are needed in return for a stake in the company"

14.2.5. 5. Remember the angel groups

14.2.6. 6. Be selective and focus

14.3. F&F investors

14.3.1. Treat angels with less awe

14.3.2. Don't believe the added value

14.4. VC

14.4.1. Angel goals are not completely aligned with VC goals

14.5. Policy Makers

14.5.1. 1. Remember that the angel market is small

14.5.2. 2. Remember the differences WITHIN angel market Remember that the majority is non-accredited investors

14.5.3. 3. Carefully assess the reasons to intervene Tax credits do not work Could lead to few startup over-valuation

14.5.4. Motivate to invest in angel groups And help the non-accredited investors