You’ve probably heard about companies getting angel investment, but what exactly is that and who are angel investors?
I miss doing videos with Carol. We used to jump on a Zoom session, kick around a few topics, and then I would edit them into segments for this blog. It was so much fun. And I got access to Carol’s brilliant mind, which meant I always learned something.
What I learned in this short conversation was that there are different kinds of angel investors with different expectations and considerations for investment.
Some angel investors are backing you personally and others are fairly hands off.
Others want a say in how the business is run and might want to have an advisory role or get free stuff for themselves and their friends.
Some are professional angel investors who can bring industry and business knowledge, and potentially introductions.
Whatever type of investor you are targeting, they will likely need you to get your financial act together so you can present them with the financial reports they expect. This can be a good thing for early stage companies who may still be winging it financially.
Investors will want to know how you intend to pay them back. Is there a fixed timeline and the investment is structured like debt?
Are you planning to sell the company in x years and generate money that way?
Are you considering going public with an IPO?
We ended with a warning to carefully think through asking family and close friends for investment. Even these people will want some kind of return on their investment.
And here is a warning: Do not borrow money from someone if they can’t afford to lose it, or if the relationship is not strong enough to withstand the loss. This could make for very awkward holiday conversations like, “Pass the potatoes and pay me back my $25K.”
This is nine minutes very well spent. I learned a ton, and I think you will as well.
Photo by Alexander Mils on Unsplash
