An angel investor is a high net worth individual (accredited investor) who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. Oftentimes angels invest for reasons that go beyond pure monetary return, including staying abreast of current trends, mentoring entrepreneurs, stimulating local economic development, and satisfying individual entrepreneurial interests.
Current regulations define an accredited investor as anyone who:
- Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, or
- Has a net worth more than $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
Students and faculty at the IU Kelley School of Business, Business of Medicine Program founded AngelBom as a mechanism to apply skills taught in the program to real world angel investing. AngelBom is an Affinity angel investing group of VisionTech, a successful Midwest angel investment group based in Indianapolis. AngelBom, which focuses on life sciences startup companies, is open to alumni, current students, and colleagues of the Business of Medicine Program.
There currently are no federal tax benefits to angel investing. For Indiana residents, the Indiana Economic Development Corporation (IEDC) has an incentive program for investing in early stage companies called the Venture Capital Investment Tax Credit (VCI). If you invest in an IEDC-certified Indiana Qualified Business, you will receive documentation for a credit against your Indiana tax liability. This credit is not available for all potential portfolio companies. For more information, visit the IEDC’s website.
There is no specific attendance/participation requirement. You are encouraged to attend or view the pitch sessions, whenever possible. Here are the expectations of AngelBom members:
- Annual membership fee
- Ability to invest from $5,000 or more annually
- Willingness to attend meetings and actively contribute to deal assessments
- Ability to make your own decision on whether to invest, by leveraging the collective intelligence and experiences of the angel group
- Desire to network and have fun participating in the entrepreneurial process
Live pitches are recorded and any member can watch them online after the meetings. There are also regular online pitches in which all members can participate simultaneously.
Membership is based on annual sign-up and membership fee. If you decide that you no longer want to participate, you simply don’t renew your membership at the start of the next year. Any funds invested in portfolio companies would not be accessible until an accepted exit, whose timing is unknown.