Market sizing for Angels

pretty high-level question here that might be too general: is there a minimum market size that a typical angel would be interested in investing in? I've heard that a typical VC wants to see a $100M market... but obviously angels are different.

Obviously it's hard to speak generally (especially for angels), but I'm just looking for some basic ballparking.

Follow-up question is - do margins come into play as well? i.e. if your projected margins are 10% in a $100M market that's not necessarily better than 85% margins in a $20M market from a profitability perspective.

My reason for asking is that I'm looking at a $15M to $25M niche market. I read Jason's blog religiously (hey Jason!), and I've internalized the advice to find 10 people who want the product, etc. I've done that.

Now I'm trying to get inside the head of an angel to see if this size of market is attractive at all.

Thanks!

Angels want the same thing as VC's do -- invest in a company and get an exit. Since angels typically invest less money, they may look at markets that are smaller than the traditional $1B dollar market, $100M in revenue 3 year model that VC's typically use.

In general, investors are looking for businesses with high growth potential that can be monetized for them (read exit). Growth implies that there is an exit for the business since a growing market will attract other competitors, etc.

Angels also want to see how the company can raise more money once their money runs out. This means that they will be looking for the same traits as a VC, just not to the micro-scopic detail that a VC will look at.

Angels are great because they get excited about technology and the team. The target market is important but not as important as the technology and the team since most angels that do the real early stage deals are in it first for the fun and second for the return.

What they usually care about is exit price in the ballpark of $40M [1]. A general way of estimating exit price is to look at 4x yearly revenue (so $10M/yr).

That doesn't mean you want a $10M market cap, because you probably won't be able to capture 100% of the market. Pay attention to possible adjacent markets (similar markets you could move in to). It's not about how big your first (probably niche) target market is, it's about how big can your company get. And the bigger your company could be, the less risky the investment (all other things being equal).

The best advice you'll get is probably from real angel investors. See if you can find any that would be interested in learning more about your idea and giving advice (this isn't a pitch). Some people enjoy giving advice and hearing new ideas, plus some investors like to keep an eye on upcoming startups and entrepreneurs.

[1] This is what I've heard from several people familiar with angel investing and building fundable companies. This may very with many different factors.