- An angel investor is typically an individual or a high worth individual investor who provides funding or financial support for start-ups in lieu of a stake in ownership in the company.
- They are usually among the family or relatives of the entrepreneur.
- Apart from investing money, angel investors share their knowledge at the critical stages.
- Financing from angel investment is much less risky than taking loans.
- Capital needs are met by angels.
- Generate large number of jobs.
- Reinvests the return.
- Angels bring portfolio expertise such as business acumen, vertical expertise, director service etc.
- Angel-funded firms are likely to survive at least four years.
- Angels do not demand high monthly fees.
- There is a loss of complete control as an owner.
- It is quite hard to find a suitable angel investor.
- They provides less structural support than an investing company.
- Angels rarely make follow on the investments.
- There is a possibility of malpractices in angel investing.
- Plays vital role in development of economy.
- More focused on commitment and passion of the founders.
- They provide loans on relatively easier interest rates, unlike venture capital.
- They make a prominent difference with a startup’s success and failure.
- They also look for defined exit strategy or acquisitions or initial public offerings (IPOs)
Typical Sources of Angel Investment includes:
- Family and friends.
- Wealth of individuals
- Crowd funding.