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Tuesday, September 21, 2010

Fool's Gold?: The Truth Behind Angel Investing in America

To become a professional angel investor, start here. Scott Shane shows that business angels are not consistently targeting the best investments, or the best terms. Business angels or informal investors are not as professional as they think they are.

In Fool's Gold: The Truth Behind Angel Investing in America, Professor Shane turns his disciplined methodology and logic towards unmasking commonly held misconceptions about angel investing. This yields accessible yet robust inferences about this little understood business activity.

Each chapter has a "Key Facts to Remember" section just before an end-of-chapter "In Conclusion" section.

Entrepreneurs, if you've ever thought about seeking angel investment capital for your business, there's a good chance you will start the process with some misconceptions. For instance, you may have had the notion that individual angels are rich -- or at least very well off -- and invest a lot of money in each business. Not necessarily so, says this book.

With this book, entrepreneurs can get a much better idea of:

- why angels invest (it may be as much about having a hobby as making money)
- how angels decide on which businesses to invest in (with less investigation than you'd expect)
- how angel investors come up with valuations and what kind of ownership interest they will expect (most don't do formal valuations and they demand smaller ownership stakes than you might expect)
- where and how to find angel investors

Shane's book is not a how-to investment classic, as this book does not provide the reader with specific tools on how to become a better investor. However, this book is an imperative read for angel investors, public policy makers and entrepreneurs.

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