Business Angel Investment

Business Angels nurture your Business Ideas...

Business Angel Investment

Your business angel investment could come from a number of sources. In the UK, people are more interested in a specialized type of funding known as angel investments. Basically, this is a kind of business liaison between a person who has a lot of money (the investor or the angel) and a person who has the business idea whose implementation needs the money (the entrepreneur). However, this kind of association isn’t just a monetary investment; the angel who makes the business investment will also be very keen on making the business thrive, because the profits from the business are what will bring them their ROI.

However, even among people who help with business angel investments, there is a lot of variety. This is mostly based on what kind of investor the person is and what he or she is looking at getting out of the collaboration. This can directly affect the nature of the business. Any entrepreneur must make a detailed study into their potential business angels and then try to go ahead with one who can better fit their needs and requirements.

Here is a study of the different types of business angel investments that you might find when you start looking for them.


Individual Angels with a Sudden Income

People who have got their hands on some sudden money, expected or unexpected, might wish to invest the money in some business. The business angel idea appeals to them and they might invest.

Pros

  1. One benefit is that you have the investment ready. You don’t have to wait much for processing, because these people already have the money and they want to invest right away. They won’t scrutinize much and paperwork will be minimal. You might just use one lawyer each to handle the dealings.
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  3. There is also the benefit that such deals can be highly customizable, depending on the preferences of both parties involved. Since this person is a first-time investor in all likelihood, there won’t be set rules of principles that you will have to rigidly follow.

Cons

  1. The lack of experience that this angel will likely have is a big deterrent. With business angel investment, you should also look for entrepreneurial tips and advice, especially if you are starting out yourself.
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  3. They will be more interested in profits than other kinds of investors. They might not be interested at all in how you run the business. This could be a problem if you are looking for their support and guidance.
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  5. They might also want returns to be quicker than what you would like.

People Who Have Just Wound Up a Business

Sometimes your angel might be someone who has just wound up his or her own business and is now looking at investing that money.

Pros

  1. You don’t have to worry about the money coming in here either, because they have the funds they got from the closure of the previous business.
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  3. These people won’t be in a hurry to recover their investment and they will give you a reasonable timeframe.
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  5. You will be happier working with them because there is all likelihood that they were in the same business as you are starting out with. This means you can benefit a lot from their knowledge.

Cons

  1. The problem with people who have already wound up a business is that they might not be credible enough to carry on for the long term with another business. Though they might give you a good frame of time to set your business up, they might not give you a very long timeframe.
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  3. Though these people have been there and done it all, i.e. they have had a business of their own, the very fact that they terminated it can mean that they lack the administrative quality. Hence, their expertise should be taken with a bit of skepticism.
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  5. They might interfere more in the business than you like. They might want the business to take a particular direction and will have some steadfast principles with which they will want the business to be carried out.

Investors Who Want to Flip the Business

These are people who are investing in a business only so that they can flip it later, i.e. sell it for a profit. They are always on the lookout for businesses that they can buy for cheap and make good money by sending it.

Pros

  1. They are likely to have a great name in the business community and you can benefit a lot in terms of your business establishment and stability.
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  3. They will have worked with a lot of founding entrepreneurs and so you can hope to get a lot of experience from them. They are institutionally bound. This helps you be assured that you can get a lot of commitment from their team.
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  5. If you are looking at setting up a business that requires a large amount of investment, this is the kind of investor you should be looking at.

Cons

  1. The fact that they are with an institution will mean that you will have a hard time proving your worth to them and getting through with the paperwork.
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  3. They will be very strong-minded about certain things and you will need to compromise a lot to fit within their rules.
So, here it is—the different types of business angel investment that you can get. Look into them and see which one best fits your needs.
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