Business Angels for Small Companies
Business angel investors are in the business of providing small amounts of capital to small businesses within the intent on generating a very high return on investment through the distribution of dividends as well as capital appreciation. As we have mentioned before, most angel investors are wealthy people that have been personally successful in business and are seeking to provide capital to companies that they understand. As such, when you are seeking business angel investors it is important for you to make sure that the individual that you are working with has a complete understanding of your business as well as your industry. If you are able to do this successfully then you will find that working with a private funding source is an enjoyable experience. One of the best aspects, beyond the capital that you will receive, when it comes to working with an angel investor is that they can effectively mentor your business as it relates to expansion.
Additionally, many of these private investors have a number of contacts from their previous success in business. As such, they may be able to expand your business organically by putting you in touch with potential vendors, clients, customers, and related firms.
Business angels typically take a back seat when it comes to managing the day to day operations of your business. However, this is not always the case. As such, it is very important for both you and your outside funding source to have a strong understanding of what is expected of both of you. You are going to need to have a very well defined contact that clearly discusses exactly how you intend to use the funds, how the business will be operated, and what roles and responsibilities that both you and an investor will have in regards to your business operations.
As always, when you are working with a business angel investor you are going to need to have an appropriate business plan in place in addition to the contractual agreements regarding the investment into your small business. Your attorney, business adviser, as well as your certified public accountant will be instrumental as it relates to these matters. Although the expense is high, it is extremely important that you have retained this individuals as you progress through the capital raising process. On a side note, you can expect that the process of obtaining a business angel investor will take approximately six months from the time that you begin your search to the time that you have an investment into your business.