Crowd Funding Has Not Killed Angel Investing Yet
Entrepreneurs who require funding for their startup have long counted on self-accredited high net worth individuals (“angels”) to fill their needs, after friends and family, and before they qualify for institutional investments (“VCs”). New crowd funding platforms on the Internet, like and , as well as the , are expected by to ramp up regular people’s ability to fund new opportunities and kill the need for angel groups.
I just don’t see it happening any time soon. I just finished a new book, , by a friend and one of the most active angel investors in New York, David S. Rose. David is also the CEO of , which is an online platform for startup financing used by over 50,000 accredited angel investors, 1000 angel groups and venture capital funds, and 250,000 entrepreneurs.
According to , angel investors contribute over $20 billion annually to entrepreneurs in the US, while the latest figures on crowd funding show about $1.6 billion collected in 2012. Of course, both are significant, but according to Rose, angel is as poised as crowd funding to take off due to the same online technology, and there is plenty of opportunity for both.
He does caution both entrepreneurs and investors to skip the hype and recognize the fundamental truths of the startup industry, before joining the crowd, or joining angels:
- Most startups fail.