Published On: Tue, Sep 10th, 2013

Get funded the angel investment option

get funded the angel investment optionAn angel investor or an angel is usually an affluent individual who provides capital for a business start-up, usually at an exchange for convertible debt or ownership equity. Angel investors are usually experts in the respective field who have exited business or retired personal who invest with their own money. In the United States, the term angel derived from the early twentieth century when wealthy businessmen eagerly invested in lavish Broadway productions.  They act as mentors, using skills and experiences to help build a business. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital, as well as to provide advice to their portfolio companies. Professional people who invest a large amount into different start-ups are known as super angels.

Angel investors usually are high risk investors. Unlike venture capitalists angel investors concentrate more on the technical and operational and side of the business other investor classes like PE has a few specific sectors of interest based on the present business scenario and trend even though the team has expertise from many fields, whereas angel investor’s choice is based mostly on their area of interest and expertise.

Angel investments and are usually subject to dilution from future investment rounds. As such, they require a very high return on investment. Because a large percentage of angel investments are lost completely when early stage companies fail, professional angel investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition. There is no “set amount” for angel investors, and the range can go anywhere from a few thousand, to a few million dollars.

Angel investors are often retired entrepreneurs or executives, who may be interested in angel investing for reasons that go beyond pure monetary return. These include wanting to keep abreast of current developments in a particular business arena, mentoring another generation of entrepreneurs, and making use of their experience and networks on a less than full-time basis. Thus, in addition to funds, angel investors can often provide valuable management advice and important contacts. Because there are no public exchanges listing their securities, private companies meet angel investors in several ways, including referrals from the investors’ trusted sources and other business contacts; at investor conferences and symposia; and at meetings organized by groups of angels where companies pitch directly to investor in face-to-face meetings.

When angel investors participate in a business it is more like they starting a venture afresh. In the initial times of this investor classes they participated in a known person’s venture.  As angel investors are mostly single individual it brings limitation such as they look for locally based companies for proximity of reach, they bring in their or money and hence demand higher return compared to other investors and they actively participate n the operations of the business.

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Get funded the angel investment option