We all know Charlie’s angels; they save the world before things get even worse for us. Well, entrepreneurs also have different types of angels. These angels save startups before they give up out of desperation.
Angel investors are individuals with a high net worth that provide funds for startups. These funds could either be a one-time thing or could be continuous and take place at different stages as the startup grows up. So, are angels basically lenders? No, because they don’t take their money back, at least not in the same way they’ve given it. Meaning that they exchange funds with equity. Unlike lenders, angel investors usually invest in the early stages of a startup to get it off the ground. So, they invest based on the potential of a company rather than the profitability.
Angel Investors vs. Venture Capitalists
Not to be confused with
Vulture Venture Capitalists (VC), they both give money to companies and startups, but they’re not the same. When it comes to funding a business, angels use their own money. That is unlike VCs that use other investors’ money to put them in a fund. VCs are all about business and so they care more about profitability than potential.
The other side of the angel
The name alone has a knight-in-shinning-armor vibe to it, but as in all stories, there’s always a plot twist. While angel investors only take equity in exchange for funds, the equity could be 10% to 50% of your company! That means a possibility of losing control of your business. This is why it’s important to think twice before giving away your power even to angels.
Except for that part, angels are mostly good for business. So where can you find them? Well, there are several places starting with Angel List; an online platform that helps business owners find investors. Angel Investment Network is another online platform where business owners can advertise their companies and angel investors will contribute if they are interested. Using your own connections to find an angel investor could work or hit up LinkedIn.