Does Your Business Need an Angel?
By Tina Jones
If you are starting a business or have a grand idea, it is important to know about angel investments. Unlike many of the conventional methods of getting start-up capital, angel investments have the potential for more than money.
You may wonder who angel investors are? Angel investors are people with money available to invest in your business. Some have been successful entrepreneurs, and many are just people looking for a great return on a good investment. Many Angel investors want to be on the frontline or ground floor of the next great idea. An angel understands they may lose their investments in some companies and reap huge profits on others. The angels focus on finding small businesses with high success rates or growth potential. Angel investors are risk-takers.
Angel investors are more flexible than banks allowing them to invest their money in whatever they choose at the dollar amount they desire. Obtaining the capital from an angel investor is only one of the advantages. The experience and knowledge that you have access to with your angel are more valuable than the capital. As mentioned, many angels are former entrepreneurs bringing years of experience to the table. The angel investor will want an equity share in your business. They have a stake in your success, and they will help you achieve it.
Obtaining an angel starts with the pitch. Making a successful pitch is the key to letting the investor know that you have a plan. The pitch highlights the entrepreneur and the business opportunity expressing its value not only to the investors but also to the customers. A clear picture of the forecast for growth and profit should be prepared into a presentation. The presentation should be practiced and also reveal your passion for your idea or business.
Research has shown that businesses funded by angel investors are more likely to survive and grow faster. Using an angel investor does come with a cost. The investor expects to see a return on their investment within a three-five year time period. This is usually achieved by selling the business, offering shares through an initial public offering, or selling to a venture capital fund, which concludes with a grim fact that the entrepreneur will lose some or all control of the business. The entrepreneur must make the decision whether or not to trade control for the necessary capital to get the business rolling.