Is now a good time to be an Angel Investor for a start up?

I have a super smart friend who is an entreprenuer.  Eats, sleeps bleeds excel.  That kind of guy.  He has come upon an asian electronics company who have granted him exlusive sales rights to distribute high tech cell phones like projector phones and watch phones etc. to the US.  The asian company is all over Europe and Asia, and is ready to tap the US market.  The plan is to have a completely webbased sales strategy where you buy the phones, accessories and talk time on line.  The big plus is it is a pay as you go plan with no contracts.  The downside is it is just as expensive as the I-Phone and the question still resides in my head whether it is likely that enough high end (I-Phone) type users will even care about a pay as you go plan.  I mean, if you are going to drop $300 on a phone, do you even care that you have a 1 or 2 year contract commitment.  It seems like the plan is to go after the people who want a cool high tech phone with out the obligation of an expensive contract.  I just dont know, given the current state of the economy, if there will be enough of those types of people to purchase these phones.  Basically, you get a cool phone that only we will have access to in the US and you get to buy minutes as you go instead of signing a contract.

 

My friend and his Board of Directors has sunk 80K into the initial investment and is now seeking 250K for angel investment.  I would only be sharing 5% ownership with the other investors that make up the 250K and the amount I invest determines my share of the 5%.  They open one store in AZ for corporate identity/legitamacy reasons and over advertise online, TV and Radio and then, as far as I can tell, hope that they sell enough phones in the first 3-6 months to entice the venture capitalists to sink 2M into it.  If that happens then the company takes a national campaign.  If not bye bye investment $.

 

Ive heard that only 1% of startups get VC $ and less than 1% of those go public.  So this task is a daunting one.  My question is more geared towards the economy; will there be enough purchasers for this product to reach its goals?  Is this current economy good for brand new discresionary luxury purchases like say high tech phones?  Id have to say no and that I would be wasting my $$$ but of course I cant stop staring at my ROI if the plan goes, well....to plan. 

 

Id like your opinon not only on this idea specifically, but investing in Start ups generally.  What should I look out for?  And what should I demand from my friend?  With the stock market the way it is it seems natural to move from stocks to startups and more exotic investments.  What do you all think?

 

 

I have a friend who just lost a bunch of money in a biotech company with a very promising drug.  Got other sin who lost a bunch too.  Not his fault but there is a reason that the risk-reward on things like this are what they are for a reason.

 

Just make sure whatever you put in is money you have no problem losing completely.

 

As for the idea, not so sure its that novel or that they can differintiate themselves from what is already out there.  At some point, the cell phone runs out of tricks and people stop for a minute to realize they really don't need their phone to cost $300 and be a blender and lawnmower on top of receiving calls!