Han Ji Pyeong, one of the main characters in the currently hottest Korean drama “Start Up,” is called as “angel investor”. While some of you might think the term only exists in the fiction, the term “angel investor” really does exist. Learn more about angel investors below!
Angel investor: an investor like a Sherpa?
In the Korean drama “Start Up“, a certain magazine defines Han Ji Pyeong as “an investor like a Sherpa”. While Sherpa people serve as guides in the Himalayas, the drama connotes that Han Ji Pyeong serves as a guide for new businessmen. The scene becomes the start of how Han Ji Pyeong gets the nickname, “angel investor”. While this might sound too good to be true, the portrayal in the drama is actually in line with the real world.
An angel investor, as defined by Investopedia, is a well-off individual who helps startups or entrepreneurs through financial aids. While venture capital firms cooperate with several well-off investors and control where the money comes and goes, angel investors are individuals. Other names for such investors are informal investors, business angels, private investor, seed investor, or angel funder.
Financial aids for businesses in need
The support given by angel investors is mostly in the form of financial aids. Sometimes, it could be in the form of a one-time investment. Some others prefer to be with the business from the start and keep on supporting it throughout the rough early stages. Several angel investors often come with more favourable offers to its lenders.
The real identity behind the angel investors
The risk for the investments that angel investors do is big. Hence, angel investors are often people who own high net value. According to Investopedia, The Securities and Exchange Commission (SEC) defines an angel investor as an “accredited investors” with a net worth of $1M or more in assets excluding personal residences. The commission further defines an angel investor as a person who managed to earn $200k in income for the two concurring years, or $300k or combined income for married couples. Thus, not every accredited investor is an angel investor.
Angel investors also try not to go over 10% of their investment portfolio for such investments. Investopedia mentioned that the success rate of angel investors’ investment is 22%. Usually, angel investors who own excess funds and are interested in other non-conventional investment opportunities opt for such investments. It is unlikely for angel investors to eye for profit through this type of investments.