For small businesses to get their start, they need funding. To grow into a successful business, they require ever-increasing funding. To receive the funding they need, an angel investor is an excellent source of funds. While the concept of angel investing isn’t particularly new, many don’t know what it means.
Angel investors provide capital to small business ventures for start-up or expansion purposes. Said investors are usually individuals who hope for a higher rate of return on an angel investment than they would receive with a more traditional investment. The investor will often seek a return of 25% or more. While it may seem a high return to be paid to the investor, angel investors are very beneficial for small businesses.
Unlike traditional investors, when obtaining an angel investment for their business, business people do not need to deal with institutional investors and traditional commercial lenders. As such, the process of receiving funding is faster and less bureaucratic. It may be preferable for a third party to negotiate with the angel investor in order to establish the valuation of the business. The result is that the investor and the business owner are more likely to be satisfied with the business terms of the transaction.
Lending Expert Advice
Most angel investors are knowledgeable about a broad range of businesses. When angel investors provide funding to a small business, the investors not only provide the business owner with financial support but also provide valuable business expertise. This type of investor can act as a mentor in the form of an industry expert. While funds are essential to get a start-up off the ground, expertise and valuable industry knowledge will help the business truly thrive.