Financing Options: Angel Investors
Most small businesses need to find funding at some point in time. Funding needs can come about for several reasons:
- Sometimes this happens prior to opening the business to get the business up and running,
- Sometimes funding is needed to grow the business from the initial startup stage to take the business to the next level (i.e. open a storefront),
- Or to expand the business to multiple locations.
Many funding options are available to small business owners, including angel investors, which many owners and entrepreneurs don’t know about. There are several types of angel investors that could potentially invest in your business.
In short, an angel investor is someone who has the funds to offer, who is experienced in business, has contacts throughout the industry, and wants to help emerging businesses in their community. Typically, an angel investor will require to be an intricate part of the business, which is something someone looking for an angel investor will definitely want for their business.
Typically an angel investor will invest anywhere from $20K – $50K, but possibly more if the business needs it and if it makes sense.
These investors are usually former senior managers in a corporation. If you can persuade them to be on your management team, it is highly recommended because you will be able to utilize their experience and skills to grow your business.
These are very serious investors who are usually self-made and wealthy. They definitely want to be involved in your company strategy, and you should allow them to help grow your business.
These investors include attorneys, accountants, doctors, and other professionals who invest in a businesses and products with which they are familiar. It is recommended to invite them onto your board to utilize their expertise.
Older, wealthy individuals who invest as a hobby are enthusiast angels, and they usually do smaller investment deals.
These investors own and operate their own business, but help additional businesses in their community through their investments. Typically, these investors will want a seat on the board of your business so they can ensure their investment is used wisely and the business is successful.
Keep in mind that if you seek out or make a deal with an angel investor you likely won’t have total control over your business. However, if you aren’t quite sure what to do to move your business forward or you need more (or the right contacts) in your industry, this may be the best option for you.