(If So Here’s Five Things You Should Probably Know About Them!)

So have you ever wondered “what is an angel investor?” And more importantly “why” on earth would any savvy entrepreneur such as yourself ever need one? Good question.

This post will hopefully shed some much needed light on that and some other extremely intriguing questions. Like “what’s” the difference between a Venture Capitalist (VC) and an Angel Investor?

What Is An Angel Investor?

 (And Why Would Any Savvy Entrepreneur Such As Yourself Ever Need One?)

First of all, unlike their name sake suggests, they did not descend from the clouds! And they weren’t sent here by some grand design! Although some of the recipients of their generosity might argue that their timely financial help is most definitely a  blessing!

By in large Angel Investors (AI’s) are nothing more than savvy experienced (in many cases) ex- entrepreneurs that like to help and mentor struggling start up businesses make it to that all important next level! Whatever that might turn out be!

Here are five things you probably need to know about (both) Angel Investors and good old Venture Capitalist or (VC’s) for short.

 1.) First off, unlike VC’s, Angel Investors invest their own money into their projects! That’s correct. And because they are considered (by Government standards), to be what’s often referred to as an Accredited Investor.

The More You Know And Understand About Finances! (The Less You Need Or Have To Rely On Outside Help!)

Which is just a fancy way of saying, they are experienced men & women, who know and understand how to (both) manage and grow a business in the start up phase and beyond.

They are legally qualified to take on the financial risk and responsibility of investing in small to midsize start up companies, that desperately need an infusion of cash! (And some much needed fresh practical ideas!)

Where as your typical Venture Capitalist firm tends to pool massive amounts of investment capital that they (usually) get from pension funds and Insurance companies etc. And they invest and manage those funds for those involved.

 2.) Since AI’s invest their own money in each individual project, they tend to invest in much smaller amounts like a low of $5,000 to upwards of $250,000 dollars.

3.) Another big misconception about (both) AI’s & VC”s is that neither one actually makes loans (of any kind) to start up small business owners and or service providers! Instead they both invest and receive an equity ownership percentage in the companies that they invest in!

Which means, they typically receive stock and (normally) a seat on the board of directors a well.

However, in the case of an Angel Investor, they are not trying to actually macro manage the company! Instead they are placed on the board in more of a mentor/advisory type role. But make no mistake about it, they invest in promising small start up companies, that believe (based on) their experience and evaluations, show promising potential future growth!

This is not charity! It’s definitely business!

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4.) AI’s (unlike) your typical VC firm, they tend to prefer to invest closer to home! Meaning-somewhere preferably in their own immediate local community and or region. Where as your typical VC, may freely invest nationally.

5.) And finally…AI’s tend to get their return on investment when the entrepreneur(s) involved (either) successfully grow the business or when it’s sold (by either) being merged with another company or sold outright. Where as a VC firm, might also look to take the company public (aka) sell stock in the company, in order to raise cash. Thus reimbursing the VC’s investment, plus hopefully a hefty return on investment as well.

This is just a quick, down and dirty five things, that will hopefully clear up the burning question, which is what is an angel investor?” Any questions?

Please list at least two simple spin off concepts (in the comments section below) that you can apply to your business, product or service in the next 30 days or less!

Take Initiative And Start Being Pro-active With Growing Your Business Or Service!

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