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Step 1
Have a high net worth. To start an angel investing business you must have a personal income of $300,000 or more, since the average investment can be anywhere from $5,000 to $500,000.
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Step 2
Consider whether you have adequate prior experience or skills in business administration, marketing or field experience in a particular industry. Assessing your knowledge and skills will give you an idea as to what types of business you should invest in. If you decide to invest in businesses outside your area of expertise, consider hiring someone who will provide you guidance with this type of industry.
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Step 3
Define your personal and financial goals so you know what you are looking for in terms of profits from your investment. Also think of how your investment can develop communities and create jobs within your market. Although a financial profit is definitely something to look forward to, you can help a lot more people with your investment, other than entrepreneurs.
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Step 4
Invest in companies whose owners have a solid financial record. Look for people who are great leaders, who are trustworthy and who can face challenges successfully. You do not want to give your money to someone who will mishandle it.
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Step 5
Research the goals of the business you want to invest in by taking a look at its business plan. Who are their competitors? What makes this business and its owners unique? How will they target customers and promote their business? How much money does the business need to finance its operations? What are the business and financial goals? You will be spending a lot of time with this business, perhaps even as a mentor, so make sure the business goals fit with your personal and financial goals. Also ask when you can expect to see a return of your investment.
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Step 6
Hire a lawyer to establish a contract between the business, its entrepreneurs and you. Determine the amount of your investment, terms of re-payment, whether you will have a certain amount of ownership and control in the company and what will happen to your investment if the business fails.
