Pros and Cons of Angel Investors

Banking & Finance

Today we are here to discuss the pros and cons of angel investors and a lot of other things that you need to understand about Angel Investors. To understand every point about Angel Investors I recommend you must read every point that we discussed here.

Angel Investors is one of the easiest ways to get financial support from the outsider. The angel investor can be a known and unknown person. They give the money to entrepreneurs and later they have to return the money with some interest. These types of investors invest money in the early stage of the business. 

Who is an Angel Investor?

An angel investor is typically an individual or a group of investors who provide funding or financial support to start-up companies for the sake of the ownership in the company. They can be the family or relatives of the entrepreneur. We also called Angel investor business angels, informal investors, angel funder, or private investors. They can only invest up to $25,000-$500,000 in start-ups.  At the initial startup stage of the business mostly investors and banks are hesitant to invest due to the high-risk failure.

6 Advantages of Angel Investors

1. Angel investors are free to make investment decisions

Angel investors are free to invest in any kind of business because they just want to become financial support for someone or a group in exchange for interest or profit in the form of a dividend. These investors know how to invest and how much to invest in which company to get a handsome profit. These investors invest wisely so that they do not get any further financial shock in the future.

2. They don’t require to do investment in collaboration

Angel Investors don’t need to invest in collaboration or a group due to taking only personal interest. If they invest on their own as an individual or a company, they will be entitled to claim their rights. The more they invest, the more they will get.

3. They are allowed to use their investor’s sector knowledge and contacts

The angel investors are allowed and have the right to involve investors world for taking out some valid and important information for putting investment in the form of funds so that they can also get some reputed position like shareholders and local investors to get interest.

4. They have good discipline

These investors are not fixed for specific interest or benefits, they only stand for their benefits in the form of interest and dividends. There is a good discipline in between these investors so that borrowers may believe that they have chosen the best investors.

5. Angel investor are allowed to use their management skills

The angel investor should have management or managerial skills to deal with clients or borrowers. The management skills teach the investors how to invest, how much, it totally depends on borrower’s status. They are the head of the investment world.

6. They don’t need repayments or interest

They have a choice to get a benefit in the form such as dividends or interest on repayment. The investors can be of many kinds who belong to the same world but have different rules of offering funds.

4 Disadvantages of Angel Investors

1. Their limit is set

Angel investors are not suitable for doing investments below the line and more the line. They can’t invest after going up to their budget. It’s not that they have limited funds, they have unlimited funds but they invest in a limited place based on the heavy financial back so that they can also get a heavy profit. They don’t run with those borrowers who have low earnings.

2. It takes time to find the suitable angel investor

It is a time-consuming process because finding angel investors is a difficult process due to less number of good investors. These investors are not easy investors, they are hard to find by the borrowers who need financial support in the form of investors that improve the borrower’s earnings by investing some funds.

3. We have to give some share of your business to the angel investor

Sometimes, investors need guidance from other investors or borrowers for knowing the rules of investment in small businesses or large businesses. Angel investors are considered weak investors who have less knowledge than others. That’s why they need some ideas to move in their professional career.

4. Angel investors are not properly structured compared to other investing company

It’s true that the angel investor are not as good as other investors or we can say that the investor’s company is not as highly good as other investment companies due to a lack of knowledge, funds, ideas, and collaboration. 

Is Angel investors a good option for borrowers to meet higher financial needs?

Maybe or Maybe not. Angel investor can or cannot be good investors. It depends on the borrower’s company who wants investors for getting funds to meet higher needs or complete increasing expectations. Again, we would say that it depends on borrowers expectations if the borrower’s expectation is high and angel investors are ready to fulfill, then it is a good thing but if the borrower’s expectation is low and angel investors are not ready to fulfill, then it does not put food impact on borrowers or it is considered as a worse investor ever. Investors can be of many kinds but sage investors are only the ones who know how to profit from borrowers and themselves.

Angel Investors

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