Angel investors usually give support to start-ups at the initial moments and when most investors are not prepared to back them. An angel investor is an individual who provides capital for a business or businesses start-up, usually in exchange for convertible debt or ownership equity.
Angel investors typically provide funding to a startup at their early stages and have a stake in your business. Startups will give the investor shares, or the right to buy shares, in exchange for capital investment.
Due to the fact that angel investors take on such high risk, they seek high returns.
Angel investing can be compelling when building out portfolio diversification. AI who are self entrepreneurs enjoy investing in industry developments and startups with hopes of their investment paying off in the end.
Angel investor’s high tolerance for risk means they they set the expectations high as they are in business to make money. Typical rate of return equals 10 times their original investment inside the first 5 – 7 years.
For the owner, the pressure to generate could put a strain on the small business. When considering angel investors, first determine whether your startup can expand at the rate the investor expects.
