Who is Angel Investors ?
An angel investor is one who has a lot of wealth. And he financially supports small startups. In return, he takes ownership equity in his company.
When an angel investor invests in any company, then that company is started. When a company starts, the chances of its failure are very high in the beginning itself.
So an angel investor has a huge risk. Will he get his money back or not? which he has invested. Angel investors invest mostly through online angel investment platforms.
The term Angel originated from Broadway Theatre. Because these wealthy people used to give money for theatrical production. So for this reason he started being addressed as Angel. Otherwise this theater would have been closed.
In a way, the profession of angel investors is very helpful. These angel investors are mostly retired entrepreneurs. These people mentor new entrepreneurs.
They fund them and with the help of their experience help them to build their business too. However, in return they also get monetary returns.
Funds in venture capital are available through investment banks, insurance companies, etc. Whereas in Angel, investors invest their own money.
Advantages
The biggest advantage of angel investing is that you don’t have to repay the funds you get. In return, you have to give the share of ownership of your company.
As well as you are free to make decisions related to investment. There is no need for collateral. You can use investor’s contacts. Angel investors are also ready to fund established businesses. You also get mentoring from them.
You also get mentoring from them. They help directly in management as well. You can also gain knowledge of investor’s sector. There is no need to give any interest.
Under this, all industries can get funds easily. Also, you do not have to pay monthly in this. And you can also use investor’s network. If you need funding in the future too, they will assist you with that as well.
Along with this, paper work is also very less in this. Angel investors take around 10% of the shares in your company. If your startup fails, they don’t even take back the investment.
You won’t have much difficulty finding angel investors inside Europe. There you will easily find angel investors. Although finding angel investors is not difficult, but it will be difficult to convince them.
If a well known investor invests in your company, the credibility of your business also increases. And people are more attracted towards your business. So that helps you even more in starting your business. And the agreements of these people are very flexible. Their terms are very flexible.
Disadvantages
Its biggest disadvantage is that, in this, angel investors ask for a huge share of your company. This can also cause you to lose control of your business. Staying on top of your decision maker can also be a problem.
And the ownership can also go out of your hands. You also have to pay a substantial return on investment from angel investors. Which has to be given in a very short time.
You may not know much about Angel Investors. It lacks transparency. You do not even know that your investor who is going to invest money in your business. Where is that money coming from? Only you have unofficial information.
Types
The easiest and most accessible way. Taking investments from relatives, friends or family members around you. This too is a kind of angel investor.
The second is crowdfunding, which is becoming very common in today’s time. And it’s also very easy. Under this there is a very large group of people. Which invests some money in a company. This funding takes place online.
Many angel investors alone do not have enough money. So that he can invest, so four-five angel investors make a group together. In which they invest in a company. This gives a lot of benefit to that company. Because he gets a network of 4 to 5 people and knowledge of different sectors from one place.
How To Find Angel Investors
About 300,000 people have made angel investment in America in the last 2 years. Angel List is a website where you can get investors. And along with this, you can also hire people for your startup.
The second is the Angel Capital Association, a group of angel investors. All high net worth people are involved in this. Which seeds provide Angel Investment. It has around 13000 investors.
Along with this, you can also use LinkedIn to find angel investors. There too you will easily find angel investors. And apart from this, you should also see and approach the local businesses around you.
You should start with local businesses only. Because they can give you funds easily. Along with this, social media can also be a best option to find angel investors.
You should make a good profile of your company and join a social media marketing company and take its service. That company will manage your social media account well. And then you should find angel investors through that.
After this Angel Forum is a private company. It connects startups and investors. Angel Forum combines both and from here it is your job, how to attract investment towards you.
Countries
America’s tech city, Silicon Valley, dominates the world. Most angel investors are found here. And us based companies get the most angel investing from this. There has been an angel investment of $25 billion in Silicon Valley in 2020.
A very large number of angel investors are found in Canada as well. According to the National Angel Capital Organization and the Business Development Bank of Canada, there are between 20,000 and 50,000 active angel investors in Canada.
And even inside China, angel investors can be easily found on a very large scale at this time. Alibaba Group has also started doing angel investing.