Angel Investors

  • 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.

Advantages:

  • 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.

Disadvantages:

  • 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.

Importance:

  • 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
  • Groups.
  • Crowd funding.
Miro Zecevic – Mina Mar Group – MMG

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