Angel Investor
Angel investors, also known as informal investors are certain individuals who provide start-up capital
for businesses. This they do in exchange for ownership equity or convertible debt. Angel investors can
organize themselves into groups called angel networks so as to share their various research and increase
on their investment capital.
Source of funding
Unlike venture capitalists that tend to manage funds from other sources, angel investors invest their
own money. Although this investment is mainly noted from an individual, these investors often get their
sourcing from different financial organizations, investment funds and trusts. In a study once conducted
at Harvard, it was noted that angel-funded firms are more likely to be successful as compared to firms
which rely on other different forms of funding.
An angel investor fills in the gap of start-up financing among family and friends, the acronym ‘FFF’ which
goes to mean “friends, family and fools” as they offer venture capital as well as seed funding. Although
it is quite difficult for individuals to raise more than a couple of hundreds of thousands from family and
friends, angel investors do not consider investments that are below $2 million. This is the main reason as
to why angel investors are one of the most common sources for high target and growth businesses who
tend to have a huge turnover at the end.
Investment Profile
Angel investors undergo high and extreme risks. This is why they require huge returns from their
investments. On the other hand because a huge percentage of investments are lost when companies
fail, that is why angel investors seek to invest in companies that have a potential of giving returns that
are even more than 10 times their initial investments within a 5 year period.
Choosing the Right Private Equity Firm
Among angel investors, people can also use private equity firms for the management of their funds. The
whole process of choosing private equity firms can be quite daunting and a hectic one as different firms
will have different requirements.
When searching for the right private equity firm, you have to choose one that goes in hand with your
investment plans. Also make sure that when approaching an equity firm, you should have your business
plan ready for presentation. This will ensure that you are not wasting your time. Your business plan
should be able to show and convince the potential investor on whether or not your business plan is
viable. A business plan is the way in which you get to sell and market yourself as being the perfect
candidate who will bring that potential investor huge returns. You can also maximize your business plan
by making it the crucial document for your firm or company. |
