Everything You Need to Know about Angel Investment Pt 1
Do you require more funding than you have for your small business? If it is in the fledgling stage and you find yourself in this situation, then you have banks as well as traditional lender options to consider. With each of this options you should proceed with relative caution when it comes to getting your business loan. If you’re in a tight spot where financial help from such an organization is not an option, you can always consider presenting your idea and business model to an angel investor in order to get that one last push into financial viability.
Who Makes Angel Investments?
Angel investors are typically people who have a high net worth and are seeking investment in a business which is in its early stages. Such a rich individual provides capital to a start-up, and this is often done in exchange for a stake in that business. That means the business would need to give up some ownership equity in return for the funds they receive. In addition to brand new ventures, angle/seed investors also tend to focus on established businesses which are still relatively small. In other words, their aim is to help a small business start and/or grow, and to benefit from that.
These people are called “angels” as they take the risk of investing in a business that is yet to make a good track record. More specifically, the word “angel” refers to the virtue they exhibit in such cases. The funds they give to businesses come from themselves and are not pooled from any group of people. As per experts in the startup fundraising scene, the term was initially used to refer to investors who financed Broadway shows in the past.
The main pertinent risk to any angel investor comes from the fact that if a business fails after they seed it, they definitely lose their investment, at least partially. They balance this risk with a strategy at the core of the deal they make, so as to be able to salvage the investment which they originally made. In order to invest in the United States of America, one must conform to the regulations put forth by the Securities Exchange Commission for accredited investors. That means to be an accredited investor, one should have a net worth of 1 million dollars at the very least, and a minimum annual income of 200,000 dollars.