IS AN ANGEL INVESTMENT A BETTER WAY TO RAISE CAPITAL THAN TRADITIONAL ROUTES?
In short, yes. An angel investment can be a much better and more lucrative way of raising capital than traditional routes such as banks, simply because it’s more likely to be a success if you have an angel on board. If you need convincing, read on.
Banks are notoriously difficult to get finance from. This is truer still if you’re a start-up business. Banks need to see security, and start-ups often can’t provide this. They’re also highly unlikely to invest in more “unusual” business ideas, so if your idea is particularly unique it’s best to steer clear of them. Even if you do manage to get a loan, it’s just that – a loan. It’s often subject to a high rate of interest and you’ll invariably be given an unrealistic timescale to pay it back. If your business doesn’t take off the ground straight away, you’re in trouble.
An angel investment, on the other hand, can be a far better decision. They can usually offer a higher level of finance than banks can, and aren’t adverse to unusual ideas or the risks inherent in start-ups. Their money isn’t a loan but an investment that’s usually offered in exchange for a share in the company, and often comes with an element of control or ownership. This can be a huge advantage.
Angels are usually successful entrepreneurs in their own right. This means they already know what works, and can bring to the business their years of experience and knowledge. This can be invaluable to the success of any start-up. As they’ve invested their own money, they’re motivated to help make it succeed and can offer you the level of support that you won’t be able to get anywhere else.
They also bring their contacts to the table. This too is advantageous, as contacts and networking can be the key to success. Having secured investment through an angel also means you’re more likely to be offered finance in the future – having a respected entrepreneur in your business shows that they have faith in it, which will in turn make your business look more appealing to others.
As you can see, using an angel investment to raise capital can be far better than going down traditional routes. If you want to be successful, you’d be wise to consider it.
About the Author:One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country.Log on to the website today. You will not be disappointed.
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