If you are like 99% of entrepreneurs, you can’t qualify for a bank loan. The situation facing most new businesses today is that there is a critical need for start up and early round financing, but the vast majority of these companies do not qualify for loans from traditional lenders. Yet the fact remains, start-up companies are still getting financed. Who, Where and How?
Angel investors have proven to be the single most important players in the entrepreneurial marketplace. Angel private investments consist of funding provided by affluent individuals typically with past experience in the business field. Angel investors are mostly ex CEOs and business owners that want to lend out their expertise and money to help start-up and early stage companies. Angels fund thirty to forty times as many entrepreneurial companies as the entire venture capital industry, estimates put the total amount between $20-$60 billion annually. Since venture capitalists typically fund large deals in excess of 500,000 dollars, an angel private investment could be the answer for small to medium sized businesses who are unable to obtain a bank loan and are not large enough to receive funding from venture capitalists. They are also less strict when it comes to their return on investment. Although their ROI requirements are quite high, the time table of payment is more flexible that with other investors such as venture capitalists.