December 3, 2013 by Tyler de la Plaine
Once you’ve crafted your business plan, secured a product sample, and honed your sales pitch, it’s time to explore funding options. Family and friends often serve as the primary source of initial seed funding. They believe in your vision and want to see your business thrive. While they typically provide sufficient funds (usually less than $100K) to launch the business, their investment may not be sufficient for substantial growth. This constitutes your first round of financing. Angel capital bridges the gap between funding from friends and family (below $100K) and formal venture capital. Venture capital funds typically refrain from making small investments (between $1M—$2M). Angel investment often serves as a second round of financing for high-growth start-ups. An angel investor is an affluent individual who provides capital for a business’s inception. The terms of the investment usually involve ownership equity. Additionally, angel Investors often possess successful entrepreneurial, business executive, or attorney backgrounds, offering valuable management and leadership advice and guidance to the start-up. However, angel investors’ high expectations for substantial returns on investments can make this type of financing expensive. Traditional lending institutions like banks often provide more favorable terms but may not be readily available for new ventures. Furthermore, our post delves into angel investors’ criteria for evaluating business plans, which can help determine if they will fund your business. Below is a concise collection of articles and information on angel investors. Understanding this complex finance field can be daunting, but it’s crucial to begin grasping it early to facilitate gradual comprehension. Remember, before making any decisions regarding contract signing, it’s essential to consult with a business attorney. Please let us know how we can further assist you.
