Modern time has seen the increase in needs of products and services encouraging many innovative businesses. Home based business; online business and small to multinational level business are springing up on a daily basis. Small business is the most preferred one as the risk involved is less so also the funds. Small business angel funding is not a major problem since many angel investment sources are available in the market that will support any small business with a good idea. The important thing to remember while choosing seed capital funding is to select the best. An innovative idea presented through a good business plan is a potential fund gainer. Salability of the idea in the market is crucial for guaranteed small business angel funding. The business plan will facilitate in deciding about the kind of funding required for the small business that a person is going to start.
About Small Business Angel Funding
Small business funding is available in various forms. In fact a small budget business can start with personal funds, which eliminates the need to go after outside investors. But there are occasions when entrepreneurs lack the required amount or they are with zero funds. In such cases small business angel investment firms come to the rescue. The lending market is flooded with diverse small business angel investors to choose from. In addition, there are many other forms of small business funding also. The two modes of business funding are equity financing and debt financing. In debt financing, one will borrow money against security and repay the capital along with interest in a fixed term. In case of equity financing in small business funding, a part of the startup company equity is given as security. Small business angle funding comes under this category. Considering the expenses and other requirements for the initial fiscal year, small business angel funding has to be finalized. It is always advisable not to divest controlling interest in small business funding. Careful spending of profit, in the initial stages, is crucial for the development of the new company. Any new business will take a year or two to get steady profits. Patience is very important for startup business entrepreneurs to see the business grow.
Small Business Angle funding and Other Options
Small business angel funding does not involve big amounts and hence lots of options are available unlike big businesses which have to depend on venture capital for huge funds.
Small business angel funding is a good option due to the conveniences involved. An angel investor will prove as both lender and advisor. There are many angel investment firms in the market ready to facilitate zealous entrepreneurs with their startups. Online site like Venture Giants is a great place to find investors and seek opportunities and ideas for businesses.
Bank overdraft facility available for most of the ventures is a great boon for entrepreneurs who look for investment other than small business angel funding. This mode of small business funding will help in unexpected expenses. Fast access to money is the convenience involved in bank overdraft.
Bank loan against securities is another small business funding method which involves a small interest. The loans are available from micro loans to huge amounts. An easy small business funding method, bank loans do not require the borrower to pay the interest unless the money is used.
Leasing equipments for the office is another way of small business funding. Vehicles, office amenities etc can be obtained through leasing. Though this does not involve cash other office requirements can be procured through this method.
Private lending comes to help where banks refuse to lend and where small business angel funding is not required. This funding source is no way different from bank loans. Once they realize the potential of the to-be-launched business then there will be no obstruction to about the investment as this small business funding providers are willing to take risks.
There are certain small business funding agencies that lets one borrow in lieu of the invoices that the entrepreneur have. Such funding will provide the lender about 90% of the value of the invoice.
To attract small business angel funding providers there are certain things to remember. Each angel investor differs from other in their criteria. Most of the small business angel funding providers looks for a position in the company. It can be the role of a consultant or a position in the board. They require transparency in work. Small business angel funding provider needs to be given weekly or monthly updates about the status of the company. A 5%-25% stake on shares, convertible debt, redeemable stock etc. are demanded by the investors according to their policy. The position of the small business angel funding provider in the future is also clearly defined in the exit strategy.
Angel investors like the companies to get their consents prior to taking any major decision during the association term. The kind of transactions such as divestment of assets, additional stock issue to the management, offering shares at a low price and other business related matters may sometimes require the permission of the small business angel funding provider’s approval. The investment belonging to the angel, they have the right oversee the company’s progress and thereby earn good profits. The board has the responsibility of presenting a potential business plan to the small business angel funding provider and to get them as to their side. The business plan needs to be complete with financing reasons, the way the capital will be used and time of IPO. In the process of association it is always advisable to develop a healthy relationship with the small business angel funding provider as the association will benefit the company in the long run. Both the investor and entrepreneur need to reach a comfort level to drive the company to a certain level in the initial stages