subject: Angel Investors - Advantages for Early - Stage Companies [print this page] Angel Investors are a suitable source of funds for early-stage ventures, as the amount of money that they provide is enough for start-ups, usually up to $1 million. Besides funds they also help the enterprise with valuable management assistance, as they have enough experience with similar companies in their portfolios. What are the advantages of angel investing?
Capital
Funds coming from angel investors usually fill the equity gap between money raised from family and friends and venture capital, required for later stages of development. The amount of money needed by early-stage companies is usually between $500 000 and $1 million and entrepreneurs that prove a high potential for growth have access to these funds.
Expertise
Companies that receive angel funds also benefit from the investors' valuable experience and resources. Angels are wealthy individuals that use their own money in the investments they make and they were once entrepreneurs themselves, besides also funding successful ventures. They provide support, expertise and contacts and their insight is a great advantage for entrepreneurs.
Geographic Location
As many angels prefer to make local investments, entrepreneurs should consider this aspect when they select prospective investors. The advantage of having local investors as business partners is that they can take part in daily business activities and take immediate action in case unexpected problems occur. Therefore, transparency and mutual trust are very important in the relationship with investors.
Wide Range of Industries
Another aspect that should be taken into account when deciding to contact angel investors is their industry preference. They are located in various industries, but in order to increase the chances of being funded and also benefit from their valuable business expertise, only business partners with experience in the company's field should be considered.
Community Involvement
Angels do not invest for the sole reason of obtaining high rates of return. They like to contribute to launching new ventures, see companies growing and help transform innovative ideas into successful enterprises. Local economic growth is stimulated, as angels get involved in encouraging customers to buy the products or services and another benefit for the community is that the new company creates employment opportunities.
Most entrepreneurs who need capital for early stages of their company's development tend to either hurry when they decide to contact potential investors or to postpone the moment as they are not sure of the advantages. In both cases they waste opportunities. If their business plan is not reviewed and they present a poor executive summary, they will not attract the attention of any investors. If, on the contrary, they ponder too much on finishing the plan or choosing from various sources of capital, that is, funding organizations, they waste precious time, as the market is continuously changing.
Angel Investors - Advantages for Early - Stage Companies
