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Angel investors

businessnegoations19314770.jpgTo open a small business you are going to need to obtain a loan or some other form of financing. If you have great credit, you can qualify for a small business loan using traditional lenders. Most people do not have perfect credit so getting a small business loan through traditional lenders can be almost impossible. One option that you have if you cannot get a traditional loan is to use angel investors.

Angel investors are people, usually other business owners, who invest in businesses. Majority of angel investors invest in start up businesses because they are looking for a higher return on their money than what they would see from more traditional investment opportunities. Regardless of why angel investors choose to invest in businesses, they are a great asset to people who are trying to start a business. The reason for this is that they can give small business owners capital to get their small business started, but they can also offer expertise, experience, and contacts in a certain line of business.

Before you make a decision about using, angel investors to finance your small business there are some things you should know about angel investors.

  • Angel investors expect an average 26% annual return at the time they invest. They also only believe that about one-third of the investments that they make are likely to result in a substantial capital loss, which means that most of their investments are going to give them some kind of a return on their investments.

  • Seven out of ten of the investments are made within fifty miles of the angel investor's home or office, which means they like to fund small businesses that are close to home. Perhaps they do this so they can keep a close on eye on their investments.

  • Most of the time angel investors are actually older, have higher incomes, and are actually better educated than the average person, but they are not usually millionaires. The angel investors are a diverse group of people that displays a range of personal characteristics and investment behavior, which means that the chances are good that you can actually find an angel investor to fund your small business.

  • Angel investors actually increase the available capital that you can have to start a business by 57%. The reason for this is that nine out of ten of the angel investors provide personal loans or loan guarantees to the companies that they invest in.

  • Majority of angel investors usually only invest a few hundred thousand dollars, it is very rare for them to invest any more than that no matter how many businesses they invest in. Generally, they invest about $37,000 per small business.

  • Majority of angel investors are devoted to small, mostly start up businesses that have less than twenty employees. Angel investors are actually the largest source of external equity capital for small businesses.

  • Angel investors only accept an average of three deals out of every ten that they look at. There are numerous reasons for them only accepting three out of the ten deals, the most common reasons that they give for rejecting any of the deals are insufficient growth potential, overpriced equity, lack of sufficient talent of the management, and/or lack of information about the business owner or other key personnel.

  • One of the best things about angel investors is that there doesn't seem to be a shortage of capital funds that are supplied by these people. It has been discovered that the angel investors would have invested even more money, up to 35% more, if there had been acceptable opportunities for them to invest in.

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