All about angel investors you need to know

Who is an Angel Investor? 

An angel investor is an affluent individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. 

How the term 'angel' evolved -  

In 1978, William Wetzel, then a professor at the University of New Hampshire and founder of its Center for Venture Research, completed a pioneering study on how entrepreneurs raised seed capital in the USA, and he began using the term “angel” to describe the investors that supported them.

Also known as - 

• Business Angel
• Informal Investor
• Angel Funder
• Private Investor
• Seed Investor

Angels come in two varieties – those you know and those you don’t know. They come in all shapes and size. Angel investors might be professionals such as doctors or lawyers, suppliers or customers, former business associates or better yet, newbie or seasoned entrepreneurs interested in helping out the next generation. They can be categorized into two groups :

1. Affiliated Investors -An affiliated angel is someone who has some sort of contact with you or your business. He or she may not necessarily related or acquainted with you. An affiliated angel may be professionals and business associates (vendors, customers, employees, competitors). It’s easy to arrange an appointment with them since you know these people. Although they have discreet income to invest in outside project, it’s likely that they will recommend a colleague to you or vice versa.
2. Non Affiliated Investors - A non affiliated angel has no contact with either you or your business. It’s favorable to start a search for an investor through your affiliated angel. Since, he or she is already familiar with you and invested his interest in your business. Non affiliated angels may be professionals, middle managers or entrepreneurs. You can reach out to them by advertising in a local newspaper, trying telemarketing or networking. Finding business brokers or intermediaries is also a good option.

•  Unlike venture capitalists and bankers, many angels are not motivated solely by profit.
• No two angels may be alike. What one angel likes another may not care about. For example, one of the angels cared deeply about competitive landscape, whereas another may not be too interested about the competitive landscape. Rather he will be more interested on financial assumptions and your team’s ability to implement.
• Angel investors vary widely, but they are typically willing to accept risk and demand little or no control. They ask for a piece of a business that maybe valuable in return.
• An angel investor can also become an important mentor. Their money is on riding on your business, they’ll highly want it to be a success.
• Angel investors are wealthy and willing to invest hundreds of thousands of dollars in your business in return for a piece of action.
• Angel investments can be perfect for businesses that are established enough to be addressed beyond startup. However, they’re still a new player in the game that they need capital to develop a product or fund a marketing strategy.
• Businesses that already have some revenue receive angel investments, so that they can take their enterprise to next level.

"They called him angel investor since they recall how much he had helped in the early days of their company." -Unknown

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