Understanding Angel Investors

Understanding Angel Investors

Are you planning on starting up a business soon? If you are, then you would surely be wondering, how on earth you can raise capital or funds for your startup business. For most businesses around the world, angel investors have proven to be quite profitable. Who are angel investors and what do they have to offer to your business?

Angel investors are investors who are always on the lookout to invest in companies who are just starting up. Currently, Angel Investors are one of the most popular means in which companies raise their capital. This has been enhanced by the various success stories which have been told about Angel Investors. WhatsApp, Uber and so much more are just some examples of the difference which Angel Investors can make in your business.

While there is an increase in the number of Angel Investors, this does not mean it doesn’t come with  disadvantages when you accept one into your startup business. The truth is that most angel investors would want to deal with your business by having a stake with your business. This could mean that some percentage of your business could belong to them. In this case, most startup owners later realize that about 50% of the business is now in the hands of these investors and they also have a large part in deciding how your business is run.

Another problem which you would most likely have with your investors is what many would refer to as the cashing out time. This is the period where they hope to cash out from the business by either pushing for your company to be sold to another, or simply making sure that there is a public offering on your business.

How do you find Angel Investors?

For most people, the basic way to identify people who could be an angel investor, is to look for wealthy individuals. Most startups who  benefitted from angel investors came from people who personally knew the owner of the startup. Sometimes, however, this might not be the case. Some angel investors could be some veterans in the entrepreneur sector who always had their eye open to new businesses, or it could be the entrepreneur themselves acquiring knowledge of an angel investor through his wide network of professional people.

As time has progressed, entrepreneurs have looked for angel investors to provide so much more than just cash. Angel investors are now interested in helping companies through their coaching and mentoring skills and this has also yielded some excellent returns on investments (ROI).