What are Angels and why are they so important?
Angels, at least in the secular sense, are individuals who
invest time and money in very young companies. In fact, they often
invest in an entrepreneur at a point when the business exists only
as a good idea.
Angels are external investors - not merely friends and family -
who invest on the merits of the opportunity, rather than because
they may have a close relationship with the entrepreneur.
The most effective Angels help entrepreneurs shape business
models, create business plans and connect to resources - but
without stepping into a controlling or operating role.
Often Angels are entrepreneurs who have successfully built
companies, or have spent a part of their career coaching young
companies.
Three defining characteristics of Angels and Angel
investing:
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| Who funds the new entrepreneur? When VCs say, "go prove the
business model" or banks start asking about profits and assets,
where can a new entrepreneur turn for funding?
Friends and family support are critical, but bringing in someone
who actually knows the industry, and can help shape the business,
is often the key to success.
Perhaps this is how Angels earn their wings: by being willing to
invest with the newest entrepreneurs - as long as the entrepreneur
has a good idea.
This is not to say that the entrepreneur shouldn't do a lot of
work on the business before meeting an Angel:
| Implications for
you: |
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Angels might provide the funding and mentorship you need to
kick-start your business. |
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Do your thinking and research before you reach out to Angels.
While they are willing to consider raw startups, they are not
interested in raw thinking.
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| The reason Angels can risk investing in raw startups, or out of
the mainstream, is because they are investing their own money.
Whereas VCs have to answer to those invested in their funds, Angels
only have to answer to themselves, or perhaps their families. |
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