Belarus, Minsk, pr. Masherova 1Their vast amount of wealth was accumulated over a relatively long period of time.
They are committed to their job of angel investing and continue to be involved with high risk investments despite their losses. They possess a diversified portfolio that encompasses all industries, including public and private equity and real estate. They serve as valuable mentors and advisors to their invested companies.
High-tech angels- These investors may have less experience than core angels, but invest significantly in the latest trends of modern technology. Their investments primarily depend on the value of their other high-tech holdings, which can vary considerably. Many high-tech angels enjoy the risk of their deals as well as the exhilaration of bringing a novel technology to the market place. Some may even prefer not to be actively involved in their invested companies simply because they dislike dealing with the daily challenges of operating a business.
Return on investment (ROI) angels- These investors are primarily concerned with the financial reward of high-risk investments. Their motivation behind investing is their perception of what other angels gross income may be. ROI angels tend to stay away from investing when market performance is poor and emerge once the market shows stability and improvement. They view each of their investments as another company added to their diversified portfolio and rarely become actively involved in the invested companies.
Unlike institutional lenders and venture capitalists, angel investors have diverse backgrounds and perspectives. In fact, their beliefs of a company’s business practices and how a startup should be managed and operated may differ significantly to what entrepreneurs may have in mind. Therefore, some angel investors can be viewed as either beneficial or detrimental to a new company’s success.
Angel investors will provide the amount of needed funding to the entrepreneur in return for equity capital. This means that the new business will be funded in exchange for ownership interest in a company. This interest usually comes in the form of stocks or some other form of ownership that converts to stock. Unlike traditional debt financing that requires immediate payment over time, equity financing does not involve repayment of the borrowed money since angel investors desire equity ownership stake.
In order for an entrepreneur to obtain startup capital from an angel investor, they will need to devise a well-written business plan, present accurate cash flow projections, the financial history, and personal and business credit profiles. Some angel investors may request the latest tax return information and bank statements from the past three years. It is necessary to present a well-detailed business plan and have confidence in the plan so that you can convince the lender that you are a low-risk investment when obtaining startup capital. If the entrepreneur appears confident and has good business sense, then they will most likely have no problem in finding their desired startup capital for their business..
The new business owner has to have a great business idea with the prospect of a high return on investment in order for an angel investor to consider an investment. The entrepreneur has to also be impressive in their pitch and business plan.
Unlike venture capitalists, angel investors typically do not want a large amount of control in the companies that they invest in. Instead, they desire a large return on investments throughout the course of several years. They believe that a higher rate of return will compensate for the amount of risk in a given business endeavor (at least 25% ROI), and often seek some sort of active role in managing the company.
The most effective way of finding the right angel investor is for the entrepreneur to actively seek industry-specific investors and perform basic research on the angel investors they plan to approach.
Finding An Angel Investor
If an individual has a unique idea for a new business venture, then the opportunity to obtain funding from angel investors can allow them to take their new business idea to the next level. While there are many individual investors to choose from, there are also many national and local groups of angel investors available.
Angel networks
Each angel network operates in a slightly different manner. For example, some angel investors may charge an immediate fee for consideration of an application, while others may not even request such a cost until the prospective applicant is approved. There are some angel investor groups with websites that encourage the applicant to fill-out an online application form, while other groups may accept a written funding request through direct mail.
Angel network distribution
There are several websites that can help individuals find networks of angel investors. These lists are usually compiled according to geographic location. Listings are divided into eight regions including the Pacific Northwest, Southwest, Mid-Atlantic, Northeast, North Central, California, South, and Midwest. There is also a category for those groups that may consider investments located anywhere in the country.
Key components that appeal to angel investors
When approaching angel investors for startup capital, entrepreneurs should have a well-rehearsed pitch along with a detailed business plan. Angel investors, unlike family members and friends, always request a complete business plan because it gives them an idea of what the prospective company and its products and services are all about. Technology companies that seek angel capital are encouraged to have a working prototype of their business idea, as well as feedback from consumers who tested the trial product. Business owners should also provide their angel group with references from their previous clients because they can provide valuable insight into the work ethic and credibility of company founders.
Insider support
Angel investors usually form networks of people so they can cumulatively invest large amounts of money in a given investment project. They typically make their business decisions based on the response of membership votes; therefore, it is an added advantage for an entrepreneur to have at least one ally among the group. One way in which business owners can win over a member of an angel group is through group member research. They should read the biographies of all members of the network and try to earn the confidence of an angel member. By winning over a member in a group of angel investors, business owners stand a higher chance of earning capital for their project.
Angel network market sector
During the research process, the entrepreneur can also find out the interests of the prospective angel network. This can be determined by reading about the previous projects the investors have funded. Some networks stay within a specific industry, while others have a more diverse portfolio to their name. For example, some angel investor groups primarily fund technology-based companies, while other networks invest in a wide range of companies, including biotechnology companies and restaurant franchises. Therefore, the choice of an investment for an angel investor greatly depends on the overall interest of the group.
Benefits of angel groups
Finding an angel investor group for startup funding can be a tedious process; however, the overall advantages of successfully obtaining angel capital can certainly outweigh any drawbacks encountered during the process. One benefit of attaining angel capital is that the angel investors often play an advisory role in their invested company; they can guide the new business owners during the early stages of entrepreneurship. Their experience also enables them to diligently address issues that may occur among management and staff within the company.