Angel Investors: The Key to Starting Your Business?
- umdcampusgigs
- Jan 12, 2021
- 2 min read
So you have a great business idea. You know what you want to do and how to do it. But no one knows you and you don’t know how to get the money to get started. This is where angel investors come in.
Angel investors are individuals or groups of affluent individuals that provide the necessary money to start a business, usually in exchange for a share in ownership or convertible debt (more on that in a separate article). Unlike other investors who are more likely to go for tried-and-true investments, angels are more likely to invest in the initial stages of a business, providing much-needed capital at a time when few would be willing to. It is this early-stage investment that really sets angels apart. Angel investors are not to be confused with venture capitalists. Whereas angel investors work alone or with other wealthy individuals, venture capitalists work for companies that invest other people’s money into companies.
Now, you might be thinking of Shark Tank. Sharks on the show have a lot in common with angels, and can even be said to be engaging in a dramatized form of angel investment. In real life, however, angels are a lot less cut-throat and make well thought-out investment decisions based on the potential they see in an entrepreneur’s proposal.
Angels are valuable to entrepreneurs as they provide not only money, but also expertise. They can help create better-informed business models and provide connections that can be crucial to garnering interest in a business and getting it off the floor. There are many ways to find angel investors -- through personal connections, websites like AngelList, investor networks, and crowd funding sites like KickStarter. A lot of it boils down to how well prepared you are to sell your idea to these potential investors. And that can make all the difference.
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