There is no minimum or maximum to invest. Investors should know that business angel investing is a risky business, which can bring about many benefits but also many losses. Business angels should invest what they can afford to lose.

Business Angel investments are generally high risk, so the returns can be extremely good. But recent researches among existing Business Angels have shown that one in three investments resulted in the total amount being lost. However, one in five investments provided a cumulative return of 50% or more per annum.

Colin Mason from the Hunter Centre of Entrepreneurship in Strathclyde, Scotland, has done a study on angel investment returns. The key findings are the following:
127 angels responded/372 investments made/51 angels had exits, 128 exits in total (90% occurred between 1985 and 1996).

• 34% of investments involved total loss;
• 6% involved partial loss;
• 8% broke even;
• 7% had return of under 10%;
• 7% had a return of 10-24%;
• 13% had a return of 25-49%;
• 25% had a return of over 50%.

In comparison with early stage venture capital funds:

• Business angels have significantly fewer investments losing money (40% vs. 64%)
• Business angels have significantly more investments, which break even or generate low returns (24% vs. 7%)
• Business angels have a similar proportion of very successful investments (23% vs. 21%)

In the US, the main findings of the study “Returns of Angels Investors in Groups” based on results received from those investments from which the investor has exited only were the following:

• As a group, the risk taken by these angels is rewarded with overall returns—2.6X in 3.5 years;
• In any particular venture, an angel investor is more likely to lose than to make money, and a significant portion of the angel investors in this sample experienced a return less than 1X.
• Angel investing can be done well in the pursuit of legitimate financial returns.

Business Angels are actively involved in the company and will therefore need business skills in order to achieve the potential of the company in which they invest and accelerate the growth of the company. Angels are often entrepreneurs themselves or have a solid entrepreneurial experience, as their role is also to provide expertise to the company in its first stages. If the business angel’s business experience is limited, the angel should consider aligning himself/herself with an experienced business angel in a syndicate.

This is about personal negotiation with the company, and much will depend on the agreement. Generally speaking, the greater the percentage of shares business angels acquire, the greater their control; but business angels should seek professional advice before signing a contract.

Research shows that, on average, the business angel will spend about ten hours a week dealing with the company's affairs. The precise nature of their involvement, however, should be agreed in advance. If the business angels have specific skills to contribute, the company should welcome their involvement; on the other hand, some business angels have interfered too much and alienated the executives who are primarily responsible for the success.

Many BANs organise investor clubs, company presentations and investment readiness programmes that are attended by other business angels who are normally willing to talk about their experiences. Virgin business angels might also consider joining a syndicate which is a practical way of putting together larger deals and enables first-time angels to gain experience with a lesser risk.

There is generally an annual fee for registering as an investor with business angel networks. Around 63% of the networks surveyed during the last EBAN analysis of the angel market in Europe (See EBAN Statistics Compendium 2008) declared to charge fee to investors (between 100 and 1.500 € on average). However, only a 16% of the networks replying declared to charge success fees to investors (from 2 to 20% of the investment made).

It worth to be noticed the fact that the number of for-profit networks has increased over the years. This could be due to the gradual withdrawal of public funding in some countries, and the necessity for networks to find sustainable funding sources.

• Lack of proposals matching their investment criteria;
• Lack of quality business proposals;
• Lack of trust in the entrepreneur or the management team;
• Lack of experience in pricing deals;
• Lack of experience in due diligence and monitoring

• Being a business angel is high risk: business angels should invest only if they can afford to loose;
• There is potential for very high reward: angel investing is a very useful part of an investment portfolio;
• Due diligence: skip the due diligent could be one of the biggest post-investment regret of angels;
• Objectivity: to “fall in love” with the investments is risky. Therefore, it is recommended to consider the opportunity costs of the time business angels spend with their investments;
• Most angels have a portfolio of less than 5 investments: this might be too small given the likely success: failure rate encourages a cautious outlook;
• Successful investments do not share a common set of characteristics – there is no recipe for successful investing;
• “Deep pockets” are needed for successful investing: bigger deals and follow-on funding are linked to investment success;
• Investment as part of an angel syndicate: deeper pockets, better deal flow, bigger investments, wide range of expertise for taping the due diligence and post investment support, opportunity to learn more from experienced investors, social dimension;
• Establishment of a relationship with venture capital funds: co-investing with VC funds did generate a high proportion of successful investments;
• Development of an exit strategy at an early stage and development of relationships with possible trade buyers.