Angel investors are willing to take a chance and invest in my project, because they believe me.
How this helps you
The best about angel investors is that they will let you built your company as you like. Look for angel investors that can help you with advice, knowledge and a network, not just money.
What is it?
An angel investor is an affluent individual who provides capital for a business start-up, usually in exchange for a share of ownership equity. Many angel investors invest in multiple start ups at the time, sometimes in groups of investors. As ‘angels’ are in many cases seasoned entrepreneurs themselves, they may be able to help you not only with their money, but also with real good advice.
Funding a start up is risky for an angel, so he will often ask for a percentage of ownership. This is based on the expected value of your company at that point in time. But with a promising upside potential for success, this may give a profitable return on investment when the angel sells back his share once the company is valued a lot more.
The term ‘angel’ originally comes from Broadway, to describe wealthy individuals who provided money for theatre productions that needed the money to survive. William Wetzel, a University of New Hampshire professor, was first to apply the term ‘angel’ for investors in his pioneering study on how entrepreneurs raise seed capital.
How does it relate?
Working on ideas often doesn’t come for free. Next to spending your life’s savings on your new company, which often is a healthy sign that you’re serious about it, there are many other options to seek funding for your ideas. From loans and crowdsourcing to angel investments and IPOs, different forms of financing exist, all for which you will be asked to exchange some form of guarantee to pay back the investment. Angel investors often ask for a share of your company’s ownership in return.
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