Being an angel investor is risky business. Angel investors use their own personal capital to fund new business ventures. Determining the right fit is a tedious process which requires a lot of field research. The book “Winning Angels,” written by David Amis and Howard Stevenson, provides great detail on how angel investors should take on this challenge, from developing a summary of activities (p. 36) to creating an Investment Criteria Summary (p. 70). This section lists 18 preparation activities and provides a time line for each task. Chapter 10 provides a pretty good analysis of how many deals and business plans an angel investor might look over in a year. It can be anywhere from a handful to hundred of each. The take-away here is that every opportunity is not created equally. Choosing the wrong investment opportunity can be detrimental. However, narrowing the field down to one or two good deals can turn out to be quite lucrative in the end.
Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.