Saturday, 23 September 2017

Information and commentary for the small business banking industry

Raising capital with angel investors

14 Sep

Angel investors are successful entrepreneurs in search of investment opportunities with promising businesses. They’re looking for a piece of the action, but they also have investment criteria and expectations. For example, they’ll typically expect an equity stake in the business. Angels will often give a business money in exchange for equity.

They’ll also be looking for a return on their investment – angels invest in promising companies with an expectation of making money within a reasonable time frame. And they’ll want to know what the end game is. For example, is a public offering or acquisition likely?

It’s important for a business to decide if it’s ready to approach angel investors. It may need funds to get to the next level, but that doesn’t necessarily mean it’s ready for angel investments. The best time to approach angels is when a business owner can clearly demonstrate that an angel’s investment will help grow their business. If a business is still in its early stages, they’ll want to see ‘proof of concept’ including a sound business plan, working prototypes, customer contracts and a record of sales.

Angel investors will want the same information for an established business, but they’ll also want to know what your vision is moving forward.

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