SaaS Angel Investors
What Is an Angel Investor?
When it comes to funding a project, an idea, or a business, entrepreneurs often turn to investors to help garner the moral and financial support needed to turn their vision into something tangible. If you’re new to the world of investing, then you might not be familiar with the term “angel investing.” However, if you’re a business professional or an entrepreneur, then you know exactly who an angel investor is, and why you might need to turn to one to help get your idea off of the ground. In this article, we’re going to talk a bit about angel investors in terms of what they do, why they do it, and how they help business owners.
Who Are Angel Investors?
According to Investopedia.com, “an angel investor (also known as a private investor, seed investor or angel funder) is a high net worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. Often, angel investors are found among an entrepreneur’s family and friends.”
With that said, what type of financial investments do angel investors provide? Well, that can differ from case to case. Traditionally, angel investors provide one lump sum investment. These one-time payments are designed to provide enough capital to help a business get on its feet. Other times, angel investors may provide ongoing cash injections to support a business during those early days where growing pains are almost always going to occur.
Pros & Cons of Working with Angel Investors
When it comes to working with an angel investor, it’s important to note that there are some positives and negatives. First and foremost, according to thebalancesmb.com, “the big advantage is that financing from angel investments is much less risky than debt financing. Unlike a loan, invested capital does not have to be paid back in the event of business failure. And, most angel investors understand business and take a long-term view. Also, an angel investor is often looking for a personal opportunity as well as an investment.”
To break that down a bit, angel investors aren’t looking to be repaid — which is a great thing for a business in its infancy. More often than not, they’re looking for the opportunity to secure a return. And this is precisely where some of the cons come into play. Instead of requiring an entrepreneur to repay the investment with interest like a loan, the angel investor will look for some form of ownership equity in the company, which means that they’ll take a percentage of the profits for as long as they remain part of the ownership.
Is an Angel Investor Right for You?
Now that we’ve answered the question, “what is an angel investor?” it’s time for you to ask yourself, “is an angel investor right for me?” Remember, angel investors are almost always some whom you already know — whether it be a friend, a family member, or a colleague. They typically don’t look for repayment of their investment, and are instead, seeking ownership stake in your company.
If an angel investor is right for you, then it’s time to get your business idea out there and see who comes knocking. If you still can’t understand what type of investment your business requires, the StarNavi team can help you. We would be happy to guide you through the tech side, too. Don’t hesitate and build your business with the best partner!
