As the old adage goes, “money isn’t everything.” Though small business funding may be the number one reason businesses seek out to find an angel investor, chances are it isn’t their only reason. Connections, notoriety, a sense of playing with the big boys, and mentorship may be other reasons why angel investors are presently the vogue small business financing option.
Angel Investors Offer Small Business Financing to the Select Few
Everyday businesses have a variety of places to get small business funding, such as invoice factoring companies, corporate banks, peer to peer lending companies, and other commercial lending institutions. Yet angel investors generally will only work with those they see as having a huge growth potential or those with large scalability options.
Because there is a stickiness or coolness factor involved, small businesses backed by angel investors can feel a jolt of confidence once they secure a deal. Being supported by such investors may send the message that a company is on the right path to success. Yet working with such a partner is no guarantee.
Angel investing, in theory at least, can work with any industry but tech and mobile are favorites – at least right now. Healthcare is also a growing sector that is becoming very popular. Yet if your business is outside of these areas, you can still obtain angel investing though it may be more difficult to get their attention, initially.
For Small Business Financing, Intangibles Count for a Lot
More than funding, small businesses can gain access to key players of their industry through the right angel investors. If you are an early-stage mobile development company, image the benefits of partnering with a retired software business executive? While you may need the money, the intangibles benefits of working with such an individual are immeasurable. Some commercial lending institutions may be able to offer you some business advice, but they likely can’t put you in touch with the right people the same way these influential investors can.
Angel investors can come from any profession (doctors, lawyers, or seasoned business leaders) and they do need to be accredited investors (according to the Securities Exchange Commission). Such angel investors are wealthy and look to invest in order to earn back considerable long-term proceeds from their investments. Many enjoy the mentorship component of the role and invest for the return but also in the hopes of leaving a legacy to a second generation.