Angel investors are one of the financing options that you can look into when you decide to start your own business venture. Business start-up is not only a crucial process it also requires a lot of time, effort, and of course money. If you do not have the money needed to fund your business, then how can you start your operation? That is why, when you start planning your business venture, you have to carefully consider your capital. And if you do not have a large amount to start with, you can rely on angel investors to provide you with capital. But before looking for one, you have to make sure that you understand the angel investors definition.
Angel investors are high-net-worth and accredited individuals that give financial aid to future business owners who are in need of start-up money. They are well-educated, have valuable experience in business, and possess a large sum of money which they invest in exchange for ownership equity. They are usually the best financing option during the early stage of the business. Nowadays, lots of individuals choose to become angel investors. And so when you start your search for the right angel investor, it is important that you know the angel investors definition of each type.
- Corporate angels are former business executives who have retired early or have been replaced. Although investment is one of their goals, they look for a personal opportunity at the same time. So, usually, they want to acquire a position in the business as part of the deal. But this should be thoroughly discussed since some corporate angels can be too controlling.
- Entrepreneurial angels are successful business owners themselves. Unlike the corporate angels, they can take bigger risks and provide a larger amount of money since they have a steady income source. Usually, these businessmen want to assist future business owners to have a successful start-up and eventually a competitive business. The major advantage of these angels is that they are less demanding and they allow the business owner to grow on his own, with them only as financial back-up.
- Micromanagement angels are individuals who have exerted their own efforts in order to become wealthy. Because of their experience, they believe that they know exactly how a business should be managed. Although they are not active participants in management, they can be very visible when the management of the business starts to have problems and is not doing well.
- Professional angels are lawyers, accountants, and doctors who want to make investments in companies that offer a service or product with which they have little experience. Their main goal of investing is to be hired by the business at the same time as a consultant in their area of expertise.
These are the different types of angel investors that you might encounter when you start looking for the right angel investor for your business. By keeping these angel investors definitions in mind, you can easily decide which one is appropriate for you.