Four Benefits of Angel Funding You Should Know and Consider

Last week we left off talking about seed funding your business and the ups and downs of that option.  This week I’m going to discuss a couple other alternatives, beginning today with Angel Funding and the role it can play for your business endeavor.

Let’s assume that your business is up and running having used whatever seed funding you were able to pull together; but now you could use a little more cash flow to take care of growing business needs, i.e. bringing some staff on board.  You know that if you could just have an infusion of a larger amount of funding, the business could really take off; and you’d be good to go to that next level of success.


Angel Funding Benefits

  • An influx of possibly several hundred thousand dollars for up to three years
  • Collaborative partnerships bringing more than money to the table
  • Not as high maintenance as using Venture Capitalist
  • Less upfront risk for business owner because of lower cash investment


Having substantially more dollars flowing into the business for initial salaries and operating costs for the next 1-3 years can certainly be an answer to your prayers.  Naturally, with Angel Funding, there will be (in most cases) some dilution of your equity in the business, usually to the tune of about 20%. Unlike venture capitalists, Angel Investors are looking for a non-majority share in return for their investment.

One thing they will be looking for is to invest where they can see the founder of the company has kicked in “earnest money” as a way of showing that there is confidence the business is viable and has a future.  So before Angel Investors put any “skin in the game”, they are going to look to see what YOUR investment has been.

Although the monetary funding is a great advantage, Angel Investors also love to help in other ways, such as forging business relationships with those who have experience in your industry.  They may also know influential players in that environment and can help introduce you to networking opportunities, as well.  This is a terrific advantage when growing a business.

Angel Investors will want to have an exit strategy that will normally be an ROI of somewhere between 2 to 10 times what they’ve put in.  Full ownership of the business can be restored if cash from the business is used to pay back the investors, possibly even using the company’s profits to do so.  Although this may mean giving up a good part of your profit margin, this isn’t necessarily a bad thing.  After all, a small part of a big pot is not a bad deal.

So if you have dreams for your business that you can’t quite make happen with your own investment funds, Angel Funding should be a consideration.  With Angel Investors, you have more people in the game with you who are interested in your business being successful.  After all, it benefits them as well when the profits soar.  Not to mention the weight it takes off your shoulders having someone else to share the load.

Our next blog post will deal with the other funding option in our armory…the Venture Capitalist… and how going after that kind of investor compares and can affect the future of your business.

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