Angel Investing

What is Angel Investing?

Angel investing is the practice of backing early-stage startups with personal capital (and often time and expertise) in exchange for equity. Angels help founders validate products, reach early customers, and attract follow-on capital. In return, angels seek a share of the value created when the startup scales or exits (acquisition or IPO).

• Stage: Very early—typically pre-seed to seed.
• Ticket size (indicative): From a few thousand USD up to low six figures per deal; can be larger via syndicates.
• Value add: Sector know-how, networks, hiring help, governance basics, and credibility with later investors.

Who is an Angel Investor?

Angels are experienced professionals or entrepreneurs investing their own money. Many focus on sectors they know well and prefer teams where their expertise can make a difference. In the Emirates Angels network, members act individually or through syndicates/side vehicles. The Association itself does not invest; it facilitates education, connections, and best practices.

Startup Stages & Rounds

• Pre-Seed: Concept/validation; friends & family, angels, accelerators.
• Seed: Early product-market fit, first revenues; angels & seed funds.
• Series A+ Scaling; mostly institutional VCs—angels may follow-on.

Angels usually participate in pre-seed/seed, where risk is high but ownership can be meaningful.

Common Investment Instruments

Portfolio Strategy

• Power-law outcomes: A few winners drive most returns—plan for many small bets with follow-ons into the best performers.
• Diversify: 15–25+ startups across sectors/stages/geographies reduces single-company risk.
• Reserves: Keep capital for 1–2 pro-rata follow-on rounds in your strongest companies.
• Check size: Align ticket size with risk tolerance and target portfolio breadth.

Due Diligence Checklist

Right-size diligence: fast for pre-seed, deeper for larger checks.

Risk & Return

• High failure rates: Many startups do not return capital—only invest what you can afford to lose.
• Illiquidity: Capital may be locked for 5–10+ years; secondary liquidity is rare at early stages.
• Dilution: Later rounds dilute ownership unless you follow on.
• Upside: Exceptional companies can return 10–100×; a few winners can drive the whole portfolio.

End-to-End Process

1. Source: Dealflow via community events, referrals, platforms, and demo days.
2. Screen: Quick fit check (sector, stage, traction, valuation).
3. Meet founders: Assess team, clarity, and coachability.
4. Diligence: Product, market, references, data room.
5. Terms: Agree instrument and key economics; sign.
6. Close: Transfer funds; update cap table; receive docs.
7. Support: Warm intros, hiring, and strategic guidance.
8. Follow-on & Monitoring: Track KPIs; reserve capital for winners.
9. Exit: Acquisition, IPO, or secondary sale.

Emirates Angels: How We Help

• Curated events and programs connecting investors and founders.
• Education on best practices, instruments, and portfolio strategy.
• A platform to request more information and facilitate intros securely.
• Advocacy with ecosystem partners to support early-stage innovation in the UAE.

Note: The Association does not invest directly; members invest individually, via funds, or side vehicles at their discretion.

Glossary (Quick Reference)