Angel investors are a set of people who come together to fund start up businesses. They are also called business angels or seed investors.They do so in exchange for some form of equity or debt in the business.
We do not refer to the literary meaning of the word angel here. Rather, we mean a set of investors who specialise in investing in high risk investment since they have the understanding that the higher the risk, the higher the returns and vice versa.
Angel investors are present allover the world now in Europe, America, the U.k, Africa etc.We also have them in Nigeria but the major challenges has been lack of proper information to beneficiary. Another problem is too much reliance on conventional practices and ways of getting finance for businesses are among a few.
Angel investors represent one of the major sources of funding for start up businesses since it is hard if not impossible for conventional banks to fund start ups all over the country. ***
Many business ideas don’t take off, though they are properly structured and the necessary already put in place. The ideas might be very good but all you really need is funding from an angel investor. The class of start up owners,ranging from employees who want to own their own businesses and employ others,to graduate school leavers,as well as anyone with a well structured business idea but without startup funds will find this article a necessary tool much desired to fund their start ups.
Follow the steps am going to recommend as well apply them and the idea will become reality.Some Angel investor programs currently run on the television with cash prizes won to fund start ups but a lot of young entrepreneurs and those with start up businesses are still largely unaware of how these things operate.This article will further guide you on the process. This will be achieved by weighing all the pros it will bring to the table.
Some of the advantages angel investors offer are:
(A) They invest in high risk investment.By this we mean businesses that banks will naturally not even take a second look at to finance due to its long term gestation period.Banks will only give short term loans but angel investors will go ahead and invest in high risk businesses since the return on investment (ROI) is high.Businesses of this nature largely stimulate the economy and go on to become large employers of labour and highly profitable when successful.
(B) It is the evolving trend in modern day business.By this we mean a lot of high net worth individuals in the Nigerian society today,who are captains of industries are not using their personal funds for investments as most people think.Most of their investments are through angel investors or venture capitalists that buy into their idea and vision.
(C) There is usually no limit to the amount of funds required that cannot be arranged by the angel investors.They are professionals who are trusted to put funds to maximum use and so have access to a large pool of funds.
Having noted all that,an angel investor will provide funding for businesses that define the following before going ahead to meet them with your application : company basics,customer problem,target market,business model,sales/marketing strategy,competitors,business plan,financial projections,competitive advantage etc.
The above listed facts should be well explained by the owner of the business idea and must be in line with current market realities or it will be easily dismissed by the angel investors.Angel investors want to know everything about the business before they will put their money.These investors are sound ,thorough bred professionals who are well versed and cannot be hoodwinked into quickly believing the business idea will work and so should be quickly funded.Every business idea will be well scrutinized since they know from research that 70% of start up businesses will fail in the first year according to research.
Here is a list of some angel investors available at the currently with their fund size:
(1) capital alliance property investment company.fundsize-$165m.areas:multi-product real estate,commercial,hospitality development projects.(www.aca-web.com)
(2) Helios investors 11 Africa fund ltd.fundsize-$600m.areas: financial services,telecoms,manufacturing,infrastructure & other services.(www.heliosllp.com)
(3) Ecp Africa fund 111.fundsize-$633.3m.areas:energy,mining,agribusiness,logistics,healthcare,consumer products.(www.ecpinvestments.com)
(4) vetiva capital
(5) Dragons den
The mentioned business angels can be contacted with your start up,properly structured,and a meeting will be arranged between the start up owner and the angel investor. You can also join the local arm of your business angel network where this is available.
Once information on the requirement is well defined,the business idea will be defended before the angel investors who will then assess the business idea using there professional expertise and experience and after asking some serious questions.
The underlining challenge that is symbolic with this form of business financing is that of ownership dilution or earnings dilution. What me mean here is that in some cases;the angel investors will finance the investment but ask to own a share of the business in terms of equity or convert there stake in venture to some debt to be offset gradually.This invariably means they become part owners of the business if agreed by the start up owner,in terms of equity .The alternative is that it is converted to debt to be paid according to the timetable as agreed & based on cash flow projections and the realities when the business kickstarts.
Every business idea for start ups comes with 2 realities; success or failure. That fact notwithstanding,angel investors still remains the best means of financing start ups I will recommend to all budding entrepreneurs. During local angel network meetings,start up owners will have the opportunity of meeting captains of industries and succesful start up owners.captains of industries are usually Invited to such gatherings so participants can network,and liaise with other start up business owners to compare notes.The fall in the crude oil price on the international market with no hope in sight for an increase means more start ups will come on board and employ more people.
In conclusion,funding start ups or getting take off grants is no longer as difficult as it used to be.we all should realise that when you work for a man.You are only working to fulfill the mans dream rather than your own aspirations.We all have business ideas we can work on,nurture and develop till it becomes a great venture and an employer of labour.Go beyond just writing a feasibility report that is not in tune in current realities or what u perceive it to be.Take a step further by making it detailed,make sure your cash flow projections are concise since this is one section the angel investors will look deeply into as it is the reason they will want to invest in your business idea in the first place anyway.Soon you will realise you will be living your business dream.
If you require further information on how to properly structure your business and be well placed so you can be open to a wide range of angel investors available in your location.You can send a mail to the Web host or go to the contact us icon on the homepage.Dont give up on getting your start up to take off,all you really require is meeting an angel investor for funding.