Startups seeking funding may consider angel investment. Angel investors are individuals or small groups who invest in startups in exchange for a percentage of equity of the startup. The amounts invested vary greatly depending on the startup and angel investors involved. Terms of investment also vary greatly and are specific to the startup receiving funding. Determination of investment is largely based on a startups funding or investment pitch, which covers all details of the startup. The main considerations for investment are market opportunity, a clear realistic business plan, and evidence of future business success. Angel Investors will want to see prototypes of products or details of services to be offered. The angel investors will ask specific questions regarding the startups finances, marketing, customers or clients, founders and management teams and so on. The startup must be thoroughly prepared to answer these questions.
A startup must complete proper, in-depth research and planning before, during and after seeking funding through angel investment. Not only should the startup be knowledgeable of their market and business plans but also knowledgeable of the angel investors they are seeking funding from. The startup and angel investor will remain in consistent contact starting from their initial meeting. Startups typically update their angel investors on their business status, both good and bad, on a monthly basis.
There are many positives and negatives of investment for both the startup and angel investor. Angel investment is very risky for the investor. If the startup is not successful all money invested may be lost but if the startup is successful there is potential for huge earnings. The main positives of angel investment for the startup, other than receiving necessary funding, is that it often results in many more business contacts and opportunities. Angel investment also often increases the startups business knowledge and experience and creates business advice avenues. Angel investment often gives the startup more credibility through association with their angel investors along with giving the angel investor credibility through association with investment in successful startups. Angel investment is often time consuming and difficult to obtain but may be a good option for startups to receive funding, often large amounts of funding, if they are willing to exchange equity for investment and meet additional terms of investment.
Kristen Gaul, RVT, VTS(ECC) is the founder of My Pet’s Care, LLC and is an experienced Registered Veterinary Technician and a Veterinary Technician Specialist in Emergency and Critical Care. Kristen is currently enrolled in the Masters of Entrepreneurship Degree Program at Western Carolina University. Webmasters and other article publishers are hereby granted article reproduction permission as long as the article in its entirety, author’s information, and any links remain intact. Copyright 2017 by Kristen Gaul.