Fool's Gold?: The Truth Behind Angel Investing in America [NOOK Book]

Overview

The stereotype of the "angel investor" is a retired wealthy entrepreneur who sees potential, asks tough questions, takes a large stake, and in a few years makes a massive return in an IPO. This outsider fills the gap between the venture capitalist and the professional investor, swooping in with cash and expertise to bring dreams to fruition.
Unfortunately, Shane observes, this figure bears no relationship to reality. In Fool's Gold, he draws on hard data from the Federal Reserve...
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Fool's Gold?: The Truth Behind Angel Investing in America

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Overview

The stereotype of the "angel investor" is a retired wealthy entrepreneur who sees potential, asks tough questions, takes a large stake, and in a few years makes a massive return in an IPO. This outsider fills the gap between the venture capitalist and the professional investor, swooping in with cash and expertise to bring dreams to fruition.
Unfortunately, Shane observes, this figure bears no relationship to reality. In Fool's Gold, he draws on hard data from the Federal Reserve and other sources to paint the first reliable group portrait of the lionized angel investors. Surprisingly, he finds that they are fewer, contribute less, and involve themselves in fewer start-ups than the conventional wisdom suggests. Most angels typically still have their day jobs, make investments of $10,000 or less, and take little or no role in assisting entrepreneurs build their companies. Few of the companies they put money into arrive at IPOs, let alone massive returns. But angels can play a critical role, he writes, if the fantasy is abandoned by all concerned. Drawing on his rich store of data, Shane offers recommendations to entrepreneurs and angels alike for the most productive use of angel investing, and suggests how policymakers can encourage it. Particularly promising are angel groups, which pool knowledge and money for wiser and more productive investments. In groups, angels can rely on each other's expertise, share the labor of performing due diligence, and generally insure that their money is being placed--and used--wisely. Fostering the formation of such groups may be the single most important thing that government can do to boost angel investing.
Massively researched and briskly written, Fools' Gold offers the first real resource on this misunderstood aspect of our entrepreneurial system.
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Editorial Reviews

From the Publisher
"The story of angel investing is long on opinion and short on data; this book does the opposite and makes a valuable contribution to this emerging financing niche with a practical and skeptical data centric approach to understanding what is going on in the world of angels." —Ian Sobieski, Managing Director, Band of Angels

"What do we think we are doing? Scott Shane shows that we're not consistently targeting the best investments, or the best terms; that we're not as professional as venture capitalists—and our results reflect this lack of focus. Become a professional angel investor; start here to first learn the mistakes and omissions that angel investing is fraught with."—Frank Peters, Chairman, Board of Governors, Tech Coast Angels, Host, theFrankPetersShow.com

"Venture capitalists, policy makers and entrepreneurs should read this book and take note. Scott Shane has uncovered the mythology surrounding angel investing by examining the facts and drawing crystal clear conclusions. I would thoroughly recommend this book to anyone, especially VCs, aiming to understand how they should engage with business angels in the future"—Simon Barnes, Venture Capitalist with Tate and Lyle Ventures

"Finally, the truth! Follow the facts in Fool's Gold? It is the entrepreneurs' guide to angel investing."—Barry Moltz, angel investor, entrepreneur, and author of Bounce

"There is so much confusion today in the market place regarding start-up and angel financing. Having a definitive, factual based book about the subject is not only refreshing but a 'must have' if you are contemplating using this form of financing for your new company. Understanding how to finance your new company is such an important decision, learn as much as you can about that process by owning this book."—Randall Bambrough, Silicon Valley CFO and Lecturer at Santa Clara University

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Product Details

  • ISBN-13: 9780199887088
  • Publisher: Oxford University Press, USA
  • Publication date: 10/15/2008
  • Sold by: Barnes & Noble
  • Format: eBook
  • Sales rank: 837,114
  • File size: 4 MB

Meet the Author

An angel investor with the North Coast Angel Fund, and a professor of entrepreneurship at Case Western Reserve University, Scott A. Shane is the author of Illusions of Entrepreneurship, among many other books and articles.

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Table of Contents


Introduction 3
1 What Is Angel Investing and Why Do People Do It? 13
2 How Big Is the Angel Capital Market? 30
3 Who Are Angel Investors? 43
4 How Many Companies Need Angels? 54
5 What Do Angel Investments Look Like? 78
6 Who Gets Angel Money? 102
7 How Does the Angel Investment Process Work? 126
8 How Well Do Angel Investments Perform? 144
9 What Are Angel Groups? 163
10 How Do the Best Angels Invest? 186
11 What Makes a Place Good for Angel Investing? 201
12 Conclusions 220 Notes 233 Index 271
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