Angel funding is the fund or money that could be money gathered by an entrepreneur for the start up of a business. This angel fund acts as the basic capital which any entrepreneur requires before starting up of a business. At the beginning of your business you should approach an Angel investor before you approach a Venture capitalist. After you have used all your funds (your own and family’s) you can ask help from an angel investor. An angel investor is usually a person who proffers capital to the business entrepreneurs who claims of money. Angel investors providing you the angel funds are mostly individual entrepreneurs or even senior executives in large organizations who are successful and have made it good by themselves. Very less people have heard of Angel investing. They are small and yet growing and so that they may endow in terms of angel funds in exchange for convertible debt or ownership equity. Angel funds generally are the second port of call before you move toward a Venture Capitalist or any venture capital estate. Angel funds are required to fulfill your requirement in terms of finance for your family or own funding and venture capital.
Unlike venture capitalists, the angel investors generally invest their own funds and money whereas the venture capitalists manage pooled money of others through professionally managed funds hence the angel funded startup companies are unlikely to fail than the other companies that have started on venture capital and other initial financing options. It is a difficult task for an entrepreneur to gather money more than some thousand dollars from his or her friends and known people but the angel investors provide the investment which sums up to an amount larger than this so that the entrepreneur is able to pull the business up to the limit of one or two million. This is so because the venture capitalists do not consider any business under that particular limit and do not make any investment on that much budget.
Generally, the Angel funds lie between the ranges of 1 – 2 million dollars. Moreover the Angel investors offer a lot more than just funds along with the angel funds they offer financial help for your day to day life’s functions. Most of the projects of angel funding that are rejected by the venture capitalists for the reason that they are too small according to their budget are better accepted by Angel funding investors and help them to reach the correct budget for approaching a venture capital investor. This increases angel funding opportunities. At times there is more than single Angel investor who invest together in a new company at its start up by an entrepreneur (who is the owner of the company).
What does an angel investor’s group do?
An angel investor’s group is a group of people including some of the successful business men and many executive class officers and successful people who are interested in investing their saves money in upcoming companies and want to have a share in that particular new company or business. The members of an angel investor group indulge in financial investments and provide the entrepreneur their experience in the field and help with their strategic thinking for the best benefits of the new companies or businesses. Their activities of the angel investors mostly revolve around the angel funds and investments to be made but the entrepreneur even get value about the business and its field from each and every communication with the angel investor’s group.
The role of an angel investment group for an entrepreneur in his business or company:
The staffs of the angel investor groups have their earlier experience in the field and even adequate operational experience and experience of starting a new business and building it into a bigger one, which helps the premature stage businesses. The angel investors have the experience required to create a small company and turn it into a high potential and multi layered company. With the experience of the angel investors a new and small company can be grown and unfolded many a times. The angel investors know that all early on the stage businesses necessitate not only money but much more experience in the field to succeed also require mentoring and need to be guided strategically. Hence angel investor group’s members not only just provide you with capital, but also with their areas of proficiency in the field to the newly found companies.
An industrialist can ask financial help from the Angel investor group which will precede him or her farther to the next stage to meet and present to a venture capitalist group. Since the Angel funding groups invest in the entrepreneur’s new upcoming business model at a high risk situation, they definitely expect higher profits in comparison to other investment alternatives prevailing in the market. The regular investment period of the angel funding usually is for about three to five years. The new companies or businesses which are already angel funded sometimes go for another turn of angel investment opportunities to get amalgamated with larger companies and increase their company’s chance to become famous and well know among the masses.
With the globalization of the entrepreneurship, Venture Capital Firms and some Angel Funds are becoming stacked in large piles that may eventually never be sorted through. The angel funds help the talented and promising entrepreneurs in reaching the goal of Venture Capital Investment. The angel funding groups do so by setting up meetings for entrepreneurs with compatible firms. Here they share their knowledge and skills with each other; also the day to day experiences are also shared that help the newbie to become familiar with the business deals and ideas.
Gathering the angel fund for a Business Plan may perhaps be one of the toughest initiatives of starting a business. The investment required often quite large and unattainable by the entrepreneurs and is the biggest hurdle all the entrepreneurs must overcome to secure Venture Capital Investment and the angel investments help in doing so.