Angel Profile Investments

Angel Profile Investments

There are certain risks which are related to the investment from angel’s investors. One of those risks would surely include impacts on traditional and angel investments made in the future. To beat the impacts, the return on investments would have to be set quite high. However, one thing which cannot be ignored is the fact that many startup companies fail and with them go the funds invested by the angel investor(s).

To combat this, angel’s investors make it a point to go for those startup organizations who can give them back the amount of investment which they have invested over a short period. Once they have managed to get the profit, they then turn to an exit route. The most popular ones are often through an IPO or the push for a sale of the startup now a full-fledged company.

While this has yielded remarkable rewards in recent times, it has been suggested that most angel investors would even do better if they actively search for the startups which would give them profits that are times 20 of what they have put in. Several reports believe that this is possible and this return is usually projected after seven years of an angel investment.

Understanding who an Angel Investor is

An angel investor can be described as an individual that is constantly on the lookout for startups or new businesses. When they find one which they like, they provide the necessary funds to see it grow and expand. Normally, angel investors have the necessary cash to make the needed investment with the expectancy for a higher return. The returns which are spoken of here would be no less than 25%. 

Angel investors are also described as investors of equity financing. In other words, this means that the investor gives the startup enough funds to succeed while taking an equity interest in the company, this means that they have some form of ownership in the company. Angel investors would also close the space which is created when it comes to funds given by friends and other relatives.

The focus of most investments made is to companies who are either new or do not have the necessary funds to expand the business. They may also have no security or collateral through which they must get those funds. If you have a startup and you wish to gain some funds from angel investors, you must consider the factors and determine if you need angel investors in your business.

Pros and Cons of Angel investors

To help you determine whether you need an angel investor or not, you would have to consider the biggest pros and the biggest cons of the investment plans.

The biggest pro which comes with angel investors is that it is way better than opting for debt financing. What this means is that if the business should fail, the angel investor would not demand repayment of his loan. Another advantage is that most of the angel investors are mostly entrepreneurs who have an eye for business. Therefore, they would also be looking to allow your business to grow and blossom. However, there are also certain flaws which come with angel investing. 

One of them is that you would have a new partner. The equity interest which the angel investor gains gives them the right to some percentage of the business. In effect, you would be letting go of your complete and total control over your startup organization.

Sources of Angel Investment

If you are looking for an angel investor, you would be pleased to know that there are various avenues. Here are some of the ways;

  • Siblings and close relatives: One popular way in which people raise funds would be through their close friends and relatives. For many startup organizations, they consider this option to be the most reliable. However, to make sure that your relationship remains cordial, it is best, to be honest with the chances of survival.
  • Rich persons/entrepreneur: Other entrepreneurs in startup organizations would look out for rich individuals who are willing to provide some of the necessary funding. These could include lawyers, doctors and so much more. Usually, you should be on the lookout for anyone who has a net worth of more than £1 million or is willing to invest about £500,000 in exchange for some equity interest in your startup company.
  • Unions or Groups: Sometimes, a group of people come together to form angel investor groups. These collective persons would ensure that the amount of funds which is invested is higher than the rest. 
  • Crowdfunding: Another way in which people get good angel investor is through crowdfunding. This is made up of communities of persons who collect small amounts of money to invest in a particular startup.

Communication is clear

While it might be enticing for you to take the leap and just communicate, the important thing to do before making a final decision on an angel investment is to talk it through with the investor on what you should be expecting from the deal. These things might not always include money. For example, it could be about certain knowledge on an area of the business or mentoring as most angel investors are known for that. Also, make sure that you have a plan ready for how you are going to run your business in the short term. This plan is one thing which would help you secure deals with investors or other financial institutions when you are just starting.

Currently, more than £40 billion is being invested in startups worldwide by angel investors and this trend looks to continue in the world of business. One reason why this trend doesn’t look like slowing down in the future is that angel investors come into the picture way before the venture capitalists even consider the startup businesses. Many angel investors would be willing to contribute anything from £25,000 to about £500,000 at the beginning periods of the incredible business.

With the collection of equity interest, the equity industry that is in place is set to grow over the next years into a global phenomenon. An angel investor is mostly just one individual. However, they can also present them in syndicates. However, in those syndicates, only one angel investor would take the lead in talking with the various startup businesses.

So how do you get started?

Well, you should always remember that most angel investors would fall into the category of lawyers, doctors or anyone who has a high net worth. The key thing is that they must have the means of supporting your business and investing in it. They must have funds available and they would be ready to give that for some equity interest. This equity interest is also known as its stakeholder’s interest in the business.

Another thing which you should bear in mind is that any investment which you have chosen would have to be accredited with SEC. To be accredited with SEC; the investor should have a net worth of £1 million. They must also be able to get at least £200,000 in a year. If they plan to invest as a couple, then they must earn at least £300,000 in a year to be able to be accredited.

The relationship between you and your investor is quite simple. You lose some control of your company in exchange for the necessary funding for your company. Most angel investors would be happy to give you about £600,000.

The perfect fit for all angel investments would be businesses who have passed the initial stage of development but are however still too small to develop a marketing strategy which would enhance their revenue output. Most startup businesses which opt for this form of investment would probably have a high level of revenue at their disposal. The investment which is gotten from angel investors would then be used to take the startup to the next step of development.

So, if you have a startup business which has pushed through the first stages and have developed a small base but lacks the necessary funding to take it to the next base, then you should consider looking for an angel investor. Angel investors would always be ready to take a risk when they truly believe business will succeed. With the right business plan, you should have one by your side in no time.