Many startups require some initial investment for equipment, expenses and the startup founders often do not have sufficient savings for the initial investment. They also find it difficult to get a loan from a bank or other lenders who find a new business very risky. So one of the most popular ways for a startup or new business , especially in the tech sector, to get funding is from an angel investor like macdonald.ventures. More details of the benefits of angel investing, how to find angel investors and procedure for getting funding from angel investors are discussed in detail below.
Angel investors are usually high net worth or wealthy individuals who are interested in investing in new businesses from their personal funds. These angel investors have usually started their own successful enterprises and are interested in diversify their investment. While the angel investors are hoping to get very high returns if the startup in which they have invested becomes very successful, they are also aware that the startup may fail and they will lose all the money invested. In addition to funding, the startup also benefits from the advice and network of the angel investor.
Since the startup founders are often young, they usually benefit to a great extent from the experience of the angel investor, who often helps the startup find new customers and business partners using his network. The angel investors will require a stake in the business in exchange for the amount which they invest in the business. While earlier startup founders would use their own savings for the initial investment, funding from angel investors makes it possible to start a business even if the founder does not have sufficient savings. In case the startup fails, the founder does not have to repay any loans, if he has used funds from angel investors.
It is important to find the right angel investor for a business. In some cases the mentorship and guidance which the angel investor provides are often more valuable than the funding. Many angel investors prefer only to invest in businesses which they are familiar with. Startup founders should also try to find an angel investor with a large network, who can help in finding suitable customers and help in resolving legal issues. It is also important to consider the personality of the investor, the founders should have similar values, work ethic so that they work well together and do not waste time in disputes.