What is an Angel Investor and How Does the Process Work?

Having an angel investor involved in a business can really help to take it to new levels. It could be that you have some business ideas that you want to turn into a start-up or a novice company that is at the stage where growth is possible. Rather than seeking a loan from the bank, you may instead want to consider giving a person a percentage of your company in shares or ownership, so that they can use their finances and experience to take you further.

Using an angel investor, such as David Spector, ThirdLove, can really be useful if you don’t want to take out any repayment plans or loans. For this partnership to work, you can receive funds to get your business up and running, or even to grow. In return, the investor may have a share of your company, which can vary depending on what you both decide. They may wish to keep this share or sell it at a later date to make a profit. Due to wanting a profit, this may mean that your angel investor would be involved for a prolonged period of time.

When fashion is your calling, you may want to opt for an angel investor who also specializes in that industry, such as Spector mentioned above. This can be because, while the financial side is helpful, angel investors often also have a secondary role. That can be to help mentor you and impart their knowledge regarding how to make your business grow. If you do opt for someone in a similar industry, they may even be able to recommend suppliers, types of fabric, and plans that may work in your favor. Due to their own commitments, your angel investor can’t be at your beck and call. However, it could be useful to meet with them on a regular basis to update them on how the money has been used, as well as to seek guidance on your next steps.

Not everyone can claim that they are an angel investor. To get started, an individual would need to earn over $200,000 annually for a least 2 years. For couples, this amount can increase to $300,000. The second requirement is to have a net worth of over one million dollars. When you want to source an angel investor for your business, it could be a good idea to go through a firm, rather than attempt to find someone yourself. This way, you could make sure that they have the collateral as promised, and that you aren’t being scammed. Both parties may also want to make sure they are in agreement, and contracts have been thoroughly dissected, before signing anything.

Having an angel investor can help your business idea blossom and grow. These individuals may very well be rather talented in their respective fields, so could be a welcome asset to your development. It may seem daunting signing over a large percentage of your profits, but the reward can be some sound business guidance and success.

Image by eko pramono from Pixabay 

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