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Angel Investing. The Gust Guide to Making Money and Having Fun Investing in Startups

  • ID: 2827021
  • Book
  • 304 Pages
  • John Wiley and Sons Ltd
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“The world of entrepreneurial startups is where the most exciting and creative action is happening in today’s business world, which is why I was a strong supporter of the JOBS Act of 2012. No wonder millions of people are wondering how they can get involved as investors. There’s no better place to start than by reading David S. Rose’s Angel Investing.
—U.S. SENATOR CHARLES E. SCHUMER, Senate Finance Committee

“From the best methods for finding and picking tomorrow’s big winners to proven techniques for adding value to any business you invest in, Angel Investing provides readers with everything they need to know to get started in this fascinating, fun—and lucrative—business arena.”
—DAVID BACH, #1 New York Times bestselling author of The Automatic Millionaire and Start Late Finish Rich, Angel Investor

“As an angel investor and a long–time fan of David S. Rose, I was delighted to hear he finally captured his wit and wisdom in the pages of a book. David’s witty stories and angel investing principles — as well as his unsurpassed knowledge of his field — are teaching me so much more about investing than I’ve learned over the years doing it!”
—BARBARA CORCORAN, Real Estate Mogul, Shark Tank star, Angel Investor

“This is the most comprehensive and readable guide to angel investing ever written. The chapter on valuation and expectations lays out a clear framework for understanding one of the least well–known pitfalls in the angel world. And its emphasis on creating a win–win relationship with the entrepreneur is at the heart of being a long–term successful angel—and continuing to see the best deal flow. I recommend this book to anyone even thinking about making or receiving angel investments.”
—HOWARD L. MORGAN, Founding Partner, First Round Capital

Angel Investing is an engaging, easy read, full of real stories and hard numbers, actual cases and a whole lot of good advice. David S. Rose brings tons of real–world knowledge to the subject that makes this required reading for every new angel.”
—TIM BERRY, Author of Business Plan Pro, Entrepreneur, Angel Investor

“Anyone with a checkbook can be an angel investor, but it takes insight to do it well. David S. Rose has written a terrific new book that will help would–be angels make money, rather than lose it. From explaining the value of diversification, to tips on evaluating deals, to offering up plans to attract good deals, Angel Investing will help you move from a money–losing amateur to a money–making professional angel. And if you’re an entrepreneur looking for angel money, you should read this book too. It will help you understand what knowledgeable angels are seeking and how they will evaluate you.”
—SCOTT SHANE, author of Fool’s Gold? The Truth Behind Angel Investing in America

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Foreword Reid Hoffman xv

Introduction: How I Became An Angel Investor xvii

Part I The Basics of Angel Investing 1

1 The 25 Percent Annual Return:Why Everyone with Six Figures to Invest Should Consider Angel Investing 3

2 Plus, It’s Really Fun! The Nonfinancial Rewards of Being an Angel 23

3 The Portfolio Theory of Angel Investing: Why Every Angel Needs to Invest in at Least 20 Companies 37

4 The Financial Life of a Startup: Where Angels Fit in the Big Financing Picture 47

Part II The Nuts and Bolts 55

5 Develop Your Deal Flow: Sourcing and Identifying High–Potential Opportunities 57

6 Bet the Jockey, Not the Horse: Evaluating the Entrepreneur and Picking the Right One to Back 67

7 Here Comes the Pitch: Listening to the Story Does It Make Sense for Your Portfolio? 77

8 Look Under the Hood and Lead a Deal: Coordinating Due Diligence and Running the Show 87

9 Valuations and Expectations: Discovering the Secret Economics of the Angels 93

10 Investment Rounds and Their Forms: Common Stock, Convertible Notes, or Preferred Stock? 109

11 The Art of the Angel Deal: Negotiating a Win/Win Relationship with Your Entrepreneur 121

12 Term Sheets and Closing: Trust Everyone…but Cut the Cards Anyway 127

13 After the Investment: Managing Your Portfolio and Adding Value as an Active Angel 133

14 Exits and Other Unicorns: Getting Your Money Out Makes All Things Right 147

Part III Your Place in the World of Angels 159

15 The Entrepreneurship Financing Ecosystem: Grants, Venture Capital, Accelerators, and Other Players 161

16 Building Your Angelic Reputation: Getting the Best Deals to Come to You 175

17 Joining an Angel Group: Increasing Your Opportunities and Reducing Your Risks 179

18 Impact Investing: DoingWell While Doing Good 189

19 Sit Back and Let Someone Else Do theWork: Investing in Startups through Seed Funds and Venture Funds 195

20 Crowdfunding and the Global Revolution: Angel Investing for Everyone 199


A Angel Screening and ValuationWorksheet 205

B Angel Investment Due Diligence Checklist 209

C Gust Convertible Note Term Sheet 215

D Gust Series Seed Term Sheet 223

E Gust Revenue–Backed Note Term Sheet 237

F International Angel Investor Federations 243

G Major Regional Angel Groups 245

H Angel Investing Blogs and Resources 249

Glossary 253

Acknowledgments 265

Index 271

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David S. Rose
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