Calling All Angels: Practically Anyone Can Be an Angel Investor

3/26/14

I’m a big fan of angel investing. The thrill of helping innovative entrepreneurs launch their dreams is as exciting as anything I’ve ever done. I once heard someone say your life is divided into thirds—you spend the first third learning, the second third earning, and the last third returning. I like that. For me, angel investing fits into that last third.

I’ve been making investments in San Diego life sciences startups since 2002. I’ve had some success, most notably with N Spine (acquired in 2007) and Trius Therapeutics (IPO in 2010 and acquired last year). I’m always recruiting others to join this budding, lucrative, and fulfilling avocation. The surprising thing is how many folks feel they don’t meet the qualifications of an angel investor. Contrary to popular opinion, angel investing is not limited to just the über rich.

I started my career as a pharmacist, helping run a neighborhood pharmacy in the Bronx. This led me to join Eli Lilly, where I was fortunate to spend 30 years in 15 different jobs throughout the U.S. and Europe, growing and learning—the second third of my life. Those experiences have molded what I do today and how I do it. The companies I invest in and help today may be much higher tech, more capital intensive, and run by very bright, highly motivated individuals, but my experience is still very relevant.

The truth is that there are a great many more people who could be angel investors.

At the San Diego Tech Coast Angels, most of our members are certainly well off by most standards. But they’re not on the level of Warren Buffet in terms of net worth. If your net worth is more than $1 million (not including your house), you’ve met the standards set by the SEC for an accredited investor.

For the most part, members of the Tech Coast Angels are just successful professionals.

So what does it really take? The innovation economy is open to more investors than you might think. The Tech Coast Angels ask that each member invest $50,000 in startups each year. That’s less than many people envision when they consider joining, and much more realistic for many folks interested in making meaningful contributions to fellow entrepreneurs. The financial returns are also potentially lucrative, albeit that most of the returns typically come from just one or two deals out of every 10 investments you might make.

Of course, there are other kinds of returns too. For me, the personal returns and learning come with every deal.

Startup founders put a premium on investors who have the right kind of experience. That’s because good angel investors can provide far more than just capital to worthy startups. Their strategic counsel in launching a new venture, from concept through company formation and development to product offering, can be as valuable to an entrepreneur as anything, including the funding needed to get off the ground.

If you accept the idea that you spend a third of your life returning, that can actually encompass quite a lot. I’m giving back to the innovation community in San Diego, and the returns on my investments are just a scorecard that show how I am creating value for the company and the community.

So to those who think they can’t be angel investors, I offer this advice: The money is neither as large as you might think, nor as crucial as you might perceive. More important is the ability and interest in being a mentor and a resource to entrepreneurs, giving the next generation their best chance for success. I hope more people join this cause. For when they do, we all win.

Jack Florio’s 40-year career in the pharmaceutical and biotech industries includes 30 years at Eli Lilly, with experience in operations, business development, financing, and corporate due diligence. He’s also an active individual investor, and serves on the board of the Tech Coast Angels. Follow @

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  • http://www.commonangels.com James Geshwiler

    Jack: totally agree more people can and should be angel investors. It’s fun, good for the economy and rewarding in many ways. As I wrote in this other recent piece in Xconomy, they also should be intentional and aware of the ways that hamper their ability to succeed: http://www.xconomy.com/boston/2014/03/10/five-ways-to-avoid-losing-money-as-an-angel-investor/

    And here’s a link to a spreadsheet that wasn’t included in the article that angels and prospective angels can download and run their own models:
    https://commonangels.box.com/s/w9rizkv9rjfctgvlva03

  • http://www.molecularassemblies.com Curt Becker

    I don’t know if many outside the community see angel investing as a way successful people can give back. Thanks for making it explicit.

  • frank hofmeister

    Extremely well stated! The financial rewards of angel investing far outweigh the risks. And, the opportunity to share one’s real world experiences and wisdom with up-and-coming entrepreneurs is what keeps the start-up community growing…and new businesses fueling the struggling job market!

  • Pete Fry

    Thanks Jack! It’s a shame the SEC currently restricts adults from making voluntary angel investments with their own money. The accredited investor restrictions shut out practically everyone from investing in start ups and enjoying the benefits of angel investing you describe.

  • Big3Bio

    Great insight, Jack. We’ll definitely share this a few times, thanks…