One of my favorite types of investing is Angel Investing. With Angel Investing, you invest in a start up company with huge potential and with good management. Our question today comes from Brian, who is interested in investing in other companies in a significant way. Here is his question:

Q: I am currently focusing on building green technology and environmentally friendly companies as a repeat business builder. However, after about 10 years, I would like to settle down to my life's wealth vision. I see myself operating a private investment business remotely from my caribbean home and yacht. I have control over when I want to invest my money to build my wealth further, so I can pick up anytime and spend time exploring the globe with family and friends. My question is related to the private equity and venture capital firms vs. how I desire investing. I want to invest in energy technology companies and nonprofit companies in all stages of growth with a diversified portfolio within green technology and and non-profit with regards to capitalization of the companies, but always investing to take a minimum of 10% interest in the company of interest and continue to build my position overtime as the company grows. Can I do this remotely via technology and decide when I want to invest without operating an active private equity fund or venture capital fund, but still build a team of advisors to help me make informed decisions? I guess I am trying to wrap my head around the technicalities of investing at this level and in a more passive than active role considering I want controlling interest in the companies I fund. Also, would you comment on whether this would be considered business or paper, since I will be a passive private investor and dealing with stocks, debt, and derivatives to acquire the companies? Thanks for you help in clarifying my expectations and vision. It get more exciting everyday with focus.

A: So, Brian, you want to control companies without working in them on a day-to-day basis. Sounds like you would like to be a VC (Venture Capitalist). VC’s always want to control the companies they invest in. VC’s normally come into a start up not only with capital but also with management expertise. They want to turn around a company, build it and sell it. They put in lots of hours to do so.

I wonder, though, whether you want a controlling interest in a company you are not working. As the majority owner, you will be at the most risk for the company’s success. Personally, I would rather look at investing in more companies as an Angel investor if I were not wanting to be actively involved in the company. This spreads out the risk.

You will want to be certain that each company has excellent systems and reporting set up, including internal controls and accounting systems. For more on this, see our series of wealth strategy courses at www.provisionwealth.com/products.

This would also be an interesting question to discuss on one of our monthly calls, so feel free to bring it up on our next call as well.

Warmest regards,

Tom