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Business> Finance
UPDATED: December 23, 2006 NO.51 DEC.21, 2006
The Anatomy of Angels
From their philanthropic Broadway roots to nanny qualities, angel investors are start-up guardians

Angels are no longer just higher beings of religion or fairy tales(2¥Œ). Behind the success of many renowned enterprises lie the helping hands of angel investors. With the rise of global entrepreneurship, angel investors have attracted wide attention through their support of start-up enterprises.

In China, angel investors are still hard to find. Some private "angels" are testing the water on their own, but there is a lack of angels operating in concert, and so far there has been no scaling of their strengths.

Small and medium-sized enterprises continue to pursue angel investors on the lookout for potential partners. This article aims to provide you with a complete picture of the angel investor landscape, to help you locate your prospective "angel," who may be lot closer than you think.

Broadway roots

People have always loved telling stories of "angels" and "fairy tales." Many well-known global enterprises such as Dell, Apple, Google and Sohu have boomed after having been nurtured in their infancy by angel investors. Many extraordinary ideas and concepts have led to stories of great wealth, purely because they materialized under the wings of "angels."

The concept of angel investors traces back to Broadway in the 19th century New York, where musical and play organizers needed capital to cover pre-performance expenses and were unable to secure loans from the banks due to their loan policies and the high risks involved. The organizers would borrow from wealthy business people, doctors, lawyers, or long-term supporters of the arts. These loans would be settled, with added interest, upon completion of the performance. Many people described these generous investors as "angels."

This concept evolved over the years and eventually the term "angel investor" became widely used in reference to independent investors or institutions who invest in small or start-up enterprises, providing support for their initial growth.

Statistics show that there are over 3 million people in China with assets of more than 100 million yuan, with over 900 billion yuan in private funds seeking investment channels in Zhejiang Province alone. Wealthy entrepreneurs in Zhejiang, Jiangsu and Guangdong are all possible angel investors, but we were unable to obtain the actual statistics regarding available angel investor capital.

Sun Wenhai, Executive Director of Eplanet Ventures, described angel investors as wealthy, forward-thinking and bold-three characteristics that distinguish an "angel" from average investors. Most of them have experience in starting up a new company and/or are directors of foreign-owned companies, CEOs of large enterprises, sports stars, doctors, lawyers, or overseas-returned scholars.

According to Lin Fuyuan, a well-known investor from Silicon Valley in the United States and co-founder of Acom Campus, angel investors are not usually professional investors, but are passionate and persistent private investors, who, just like the professionals, choose their target companies based on financial statements and data provided by banks. Lin is a highly experienced angel investor who has invested in 50 enterprises and has successfully exited from 20 of them. His areas of investment include real estate, software and electronics firms, 80 percent of which are located in China.

'Angels' work like nannies

In contrast to venture capital (VC), angel investments tend to be smaller and focus

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