Substantial financial investments are required for a typical startup to become a large company notable and. A great example is the Apple company, which started its successful and a long way from a regular garage.
However, this changed after receiving funding from a particular angel investor. In this article, we would like to describe angel investors in detail and the help they can provide to budding entrepreneurs.
The essence of angel investors
In simple terms, an angel investor is a private investor who invests his funds in developing a particular startup or business idea. At the same time, he took an active part in the development issue of the production. The main feature of angel investors is that such an investor plans to make a long-term return on their investments, unlike a benefactor.
At the same time, philanthropists invest resources and money on a voluntary and grant basis. As a rule, business angels invest individually and as part of the syndicate. The story of the angel investor term began in the 20th century in the United States. The origin of this phenomenon is occasioned in which investors have given money to show theatrical productions on Broadway.
As a rule, these generous investors did not expect investment returns, and financially supported theatrical performances were on the verge of falling. This is why the angel investor term is comparable with the term patron.
Distinctions of the angel investor from the regular one
Today, there are several ways in which a person can become an investor. First, they can buy shares in a company and become a shareholder. Thus, this man invests personal finances in the development of a company. However, you should be aware that, in this case, investors’ rights will be limited, and this limit will vary depending on the stake purchased in the company.
The second way to invest is to invest in an investment fund in which managers will invest in companies or projects from which the entrepreneur can profit. Among other things, we would like to mention venture funds. They operate similarly. However, unlike the type of fund we have described, they invest in companies that need money to start a project or a new development phase.
A distinguishing feature of a venture capital fund is that it knows in advance which company it invests in and which financing conditions will operate there. The feature of angel investors is one fact. They invest based on their desires and preferences. They can invest in any startup on their terms and conditions.
This is why private investors are much preferable to young and emerging companies. An entrepreneur who cooperates with angel investors can create relevant and flexible relationships compared to venture funds, which have unique rules and conditions.
Search for angel investors for your startup
Many young companies should choose the angel investor for their projects correctly. First of all, such an investor will require from you not only financial investments but also development assistance, as well as personal experience and various useful acquaintances that will help your startup progress.
If you have found a private investor, we recommend you pay attention to some factors that will help you understand that you have the right investor in front of you:
- The angel investor has extensive experience in investing in a particular field.
- Financial stability of the investor. This factor will help you to eliminate the likelihood of undue financial burden on your startup or termination of cooperation.
- Experience mentor. Competent private investors can provide specialized assistance to young entrepreneurs. The vast experience of the angel investor will help you adjust the direction of your startup.