How Angel Investors Can Benefit a Small Business

June 13, 2014 | By | Reply More

angel investors

Funding a brand new or long-established small business can be done in a variety of ways. You could use personal funds, obtain a business loan from a lender, or try your hand at raising capital through crowdfunding. One of the most effective strategies, though, lies in finding an angel investor to help financially support your enterprise.

A basic angel investor is an individual who opens up his or her wallet to provide funding to a startup company that’s in need of a financial boost. In many cases, these investors often provide money to entrepreneurs in exchange for a predetermined amount of equity ownership in the business at-hand or for convertible debt. While lots of business angels use money from their own bank accounts, this funding could also originate from separate business entities, trusts, and investments in which an angel’s money is stored. There has been research showing that startups funded through angel investors have a higher probability of long-term success and sustainability than companies funded through other means.

Angel investors generally work on their own in search of investment opportunities, but some team up to form angel investor groups. Investors who are involved in angel groups can perform research, share resources, and collaborate financially to offer larger funding options for small business owners. In addition, these groups can provide beneficial financial guidance to entrepreneurs who are not used to handling large sums of money, investments, profits, and other unique aspects of business ownership.

There is lots of variation in the amount of money one angel investor could give out compared to another. These investors often provide anywhere from a few thousand dollars to up to millions of dollars in rare cases. These amounts are certainly based on how much an investor currently has in the bank and the profit potential of the startup company the investor is helping to fund. This funding may come as only a single investment paid all at once, or it could be made with regular payments over time. There are so many industries in which angel investors find companies to support. But there has been research indicating that the medical field has had more startups and small businesses funded via angel investors compared to other industries. A big reason for this lies in the large amount of biotech and medical advancement companies that have popped up in recent years.

The best way for entrepreneurs to find angel investors is to conduct online research. Web-based directories provide lists of angel investors who are interested in exploring investment opportunities. It’s often challenging to woo an investor to provide money to your startup, but it is certainly worth checking out these directors to at least see who is out there. If your business concept is unique enough, investors may be much more willing to dig deep into their pockets and offer funding in exchange for something that would benefit them.

Recommended Books on How Angel Investors Can Benefit a Small Business:


About the Author: 

Bert Seither is the Vice President at 1800Accountant, the nation’s leading accounting and consulting firm for small businesses. For over 10 years, Seither has assisted thousands of entrepreneurs to put their companies on a path to prosperity.
How Angel Investors Can Benefit a Small Business
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How Angel Investors Can Benefit a Small Business
One of the most effective strategies of funding a brand new business is finding an angel investor. Learn how angel investors can benefit your small business.
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Category: Finance a Business

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