Angel Investment
Angel investors are often high net worth investors who back high-risk start-up businesses. Generally, the amounts that they invest are modest as they try to maintain a spread of risk over several investments. In some cases, they are either friends or family of the entrepreneur.
Angel investors typically receive convertible debt or equity in return for their investment. An angel investor may be the first to fund a novel concept. Generally, an angel investment has better terms than subsequent investment rounds.
Unlike venture capitalists, angel investors are less focused on a concept than helping the founders receive the funding they need to make their dream a reality.
The Pros of Angel Investment
- Getting a financial injection early in your business’s life will increase your chances of success.
- Without an angel investor, you may need to borrow money.
- With a loan, you must repay the bank regardless of the company's success.
- You gain the investor's skills as well as the investor's money.
- Angel investor frequently run successful enterprises.
- When an angel investor invests in your firm, they join your team.
- You can leverage their knowledge and expertise to improve your chances of success.
The Cons of Angel Investing
- You give up a piece of your firm to get an angel investor's money
- You’ll likely lose some control.
- When an angel investor invests in your firm, they aren't going to sit back and watch.
- There’s a potential that your angel investor’s ideas may collide with yours.