Business Angels Investment
Sometimes new businesses can find wealthy benefactors who are willing to invest their capital in the business in return for compensation. These individuals are called “business angels. This name comes from the fact that they step into an investment situation when no one else will. Often small businesses have difficulty acquiring money for their starting costs. Large investment corporations and traditional lenders are often unwilling to take on the risk associated with beginning a small business. Business angels provide for this need. To the new business owner, they truly are angels, because they save the day in a desperate investment situation.
Typically, business angels will invest in businesses that need an amount that falls within £10,000 and £250,000. The average investment an angel investor makes initially is usually around £75,000. They will choose to invest in businesses with excellent business plans and the potential for a high return on investment. Business angels are picky when choosing businesses to invest in because of the high risk they take with the investment.
Why would a business angel to be willing to invest in a high-risk new business endeavor? They are looking for financial gain at the end of the business relationship. Business angels receive a percentage of the equity of the business in return for their investment. This type of finance means that the business angel has a share of the ownership of the business. Sometimes they will retain some control over the way the business is … Read the rest