Private investors, angel business capital or even funding from venture capitalists may seem like a boon to your startup business. But you need to be careful while dealing with them and weigh carefully the pros and cons of the entire agreement. This is very important. A lot of times, entrepreneurs are unable to give angel investors the high rates of return that they demand, resulting in their business getting closed down.
Say Hello To Angel Investors
If you don’t know what I’m talking about, let me introduce you to private angel investors. There are several categories of private angel investors – some of them invest passively, which means that after they provide funding to your company, they assume a very passive role in the day to day workings of your company. Most times, these passive angel investors are professionals in their own right, in various fields like medicine, law etc and don’t really have prior HULT PRIVATE CAPITAL entrepreneurial experience. They are merely looking to make a good investment.
But there is another category of angel investors who take an active hand in the company that they back. They might be looking for an opportunity to put the network and influence they have acquired over the years, to good use, or they might also want to experience the thrill of setting up a company again, using the new entrepreneur as their means. For these types of private investors, angel business capital is not the only thing on their plate, their agenda usually involves a seat in the board of directors or having a say in the management of the firm.
There are other angel investors who take on the role of mentor. This last type of angels are not just called private angel investors, but Super angels because they have large sums of money at their disposal and are willing to invest it. They can invest up to a million dollars in just a single deal! Whatever be the category of angel, you must realize that they all have private wealth of their own, which is what distinguishes them from venture capital firms.
A Word Of Advice
Before you approach private investors, you need to work out the amount of angel business capital that you will need. Do keep in mind that this should not just be an arbitrary amount. This should be a calculated amount. Plus, you have to be able to show exactly why you will need the money – a detailed account of how you intend to allot the cash is the order of the day.