How beneficial angel investments to entrepreneurs?
Having someone believe in your idea is the best feeling in the world. When someone is willing to put their money behind you, even better.
So sourcing this investment is an important yet challenging part of business. Perhaps the most widely known alternative source of money for an entrepreneur, other than a bank, is the angel investor.
Angel investors are individuals who provide capital for start-ups and new businesses. An angel investor is a high net worth individual who makes use of their personal disposable finance and makes their own decision about making the investment (which differs from venture capitalists who invest in firms or companies using other people’s money).
The type of investment can also depend on the mindset of the angel investor, and his/her vision of the future. If the investor only looks at ethical businesses, your business needs to meet their minimum requirements to be in with a chance of investment.
Investors looking to support agricultural entrepreneurs might decide to provide money for core supplies such as fertilizers, water or irrigation systems in order to make the new business viable – eventually benefitting both the entrepreneur and the investor.
In the technology field there are a handful of things that the investor can do. Primarily, he/she can be a shareholder, a popular route for angel investors in technology companies.
Another popular investment route is real estate. Buying or building a structure can be extremely profitable; it can be used either as a business location or for rental. Buildings’ values may increase over time, thus making investment in real estate both financially interesting and worthwhile.
In addition, you can invest in companies by buying shares. For example buying shares in mega-brand Apple will be more fruitful (pardon the pun) than buying shares in a small company. Investors usually tend to buy in bigger companies rather than smaller ones, although this also depends on the overall vision/ethics of the investor.
Type of investment aside, it can sometimes rely heavily on the investor’s long-term vision for the future. Each angel investor has his or her own goals, ideas or overall vision to achieve.
Some angels rely solely on the income from their investments, so need their investments to earn as much money as quickly as possible. Others may invest because of extra money they have, or to increase their wealth and their worth. Others try it for a challenge and its risks. Their goals may vary but the challenge is to invest in the right direction. The investor’s vision is where he/she wants to be, what he/she can invest in, how to improve the business they have invested in, and how ultimately to achieve success.
You may ask yourself why anybody invests these days. Isn’t it difficult and pricey, maybe too risky? Some may think that to invest you have to have millions of dollars/dirhams/euros. That’s not the case. Investing doesn’t always have to be about making money.
Some investors supply a low – but constant – budget to support small projects that they hope will become huge someday. Or perhaps they just want to provide help to a sector of society that banks won’t touch. That is the real purpose of investing: to support new business.
Million dollar investments in growing businesses do happen, but that sort of money often comes after years of hard work.
Furthermore, anybody can invest no matter their budget or age.
Being a young investor takes dedication and perseverance. Childhood savings accounts or investments in bonds probably won’t make millions. Successful or otherwise, it is an important life lesson. Invest in something or someone you believe will succeed.
And that’s what angel investors do.
