A startup with an idea that will do well on the market, can only succeed if it has enough capital. This is where angel investors come in.
Angel investors help to drive the dreams of a company’s founders. They provide the cash that’s necessary for them to grow their business from its inception. This article will explain how angel investing works.
Who are angel investors?
Angel investors are people who put money into a company in its early stages. They place capital in startups in exchange for a stake in the company, hoping that it will do as well as many other startups that have risen to prominence in the last decade.
Macdonald.Ventures focuses on tech angel investing. They partner with inventors from the start, in order to cultivate leaders who can positively impact the world.
Are Angel investors taking a risk?
Angel investors are taking a significant risk whenever they invest in a new company. For one, in most cases the entrepreneurs are inexperienced so they don’t have the benefit of all the wisdom that would have been gained by making multiple mistakes over the years.
New businesses can fail and in fact, quite a significant percentage do. Angel investors receive a stake in the business as a reward for the cash that they put in upfront, so they have a vested interest in helping the entrepreneurs to do well.
This is one of the reasons why some angel investors make a determined effort to offer guidance to the founders of all the companies that they invest in. However, they find a balance between offering support and expertise and giving the founders freedom to guide their company, in the direction that they think is ideal for them.
Partnering with your Existing Team
Angel investors partner with your existing team. They don’t attempt to take over the reins of leadership. They want to know if there are plans to make any new additions to the team later on.
For this reason, before an investor decides to put capital into your startup, they must be assured that the team is capable of managing the business well. They want to know that the team is motivated and will not buckle under pressure or lose their enthusiasm for their ideas at the first sign of a problem.
They examine team cohesiveness and will often want to know whether a team has worked together before. Angel investors don’t want to put their money into a company only to find that plans fall apart because the partners can’t agree among themselves.