What Can An Angel Investor Do
For Your Business?
Angel investors are usually individuals that are prepared to take an equity position in your business in order to achieve a higher return on their capital than what they would be able to receive from an institutional investment.
In many cases, these individuals are retired or semi-retired business executives that have an interest in a specific business sector or have a specific business expertise that they can leverage through a small or medium sized business in the right industry.
Angel investors can be both active and passive investors meaning that in some cases they will make an equity investment, but will not be involved in the management and control of the business.
More typically, angels are active as they want to utilize their specific expertise to help get a prospective business over the hump.
In terms of equity capital sources, they tend to fill the gap between friends and family and the venture capitalist. Angels tend to work on smaller placement amounts than venture capitalists and can make their investment decision on more of an emotional basis than a pure logical basis.
Like any relationship, the right fit is essential for good results. And like venture capitalists, there is far greater demand for angel investment sources than supply.
The process for locating an angel that would be a good fit for your business will likely take time and for thought in planning. And the more desperate you are for capital, the larger the portion of ownership you are likely to have to part with in return for the capital injection.
At the same time, many angel investors are also passive, so a well laid out business plan and a timely courtship can create a positive result.
Similar to venture capital, this form of financing is not very predictable and requires time to research and investigate.
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