Degrees of Angel funding in Startup and Business

Degrees of Angel funding in Startup and Business

The sharp contrast between angel investors and other venture capitalists can be seen in the way that they manage their funds. For angel investors, they invest their funds directly while venture capitalists would prefer to take on the management role of funds which has been pooled by a group of people. In other words, the funding when done by venture capitalists would take the shape of a trust fund even though the actual funding was done by a group of individuals. 

Reports which were conducted by scholars from Harvard have put the way that angel investors invest as the reasons why many startups tend to succeed when they have one backing them. This was discovered when angel investing was compared with other ways in which startup organizations raised funds through other means.

The capital which is invested from angel funding is said to fill the gap between the capital which can be borrowed from friends and family. It can also have a greater impact than most of the funding which would come from seeking funds from venture capitalists. This is because of two factors. The first factor is that the process of getting a lot of funds in the range of £100,000+ can be difficult from friends and family. The second factor is that most venture capitalists would not be looking to make investments or funding startup companies with nothing less than £1 million. This is where angel investors come in. reports have shown that the angel investments are the most popular form of funding when it comes to the second financing round of startups. The total amount which this form of funding has brought in over the years is said to be about £20 billion yearly. This is not too far behind the venture capitalists total sum.

The major perk which comes with angel investments is that there is no amount of capital that is seen as too small or too big in the views of angel investors. Hence, you could ask for capital starting from just thousands upwards to millions.

The investment pattern of angel investors is also unique. Most of the angel investors are more likely to invest most of their funds in business relating to health and medical issues with about 30% of the total funds invested to have come to this industry. Others would include the industrial industry, retail, software and so much more. While the truth is that angel investors are much more popular than venture capitalists, the ability to raise enough funds through them can prove to be a tad bit difficult. One reason why this is true is because of the cognitive biases which are involved when it comes to making decisions on investment. Some of the biases would include the illusion of control amongst others.