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Asked a question 4 years ago

What factors should be considered by the entrepreneurs to finance business through angel investor?

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Before entrepreneur approach angel investor for investment, he must take into the consideration the following advantages and disadvantages of angel investor.

Advantages are as follows 

  1. Incase of angel financing, there is no need for collateral i.e personal assets. 
  2. Knowledge, expertise, experience and contracts of angel investor can bring lot of benefits for the young enterprise. 
  3. The business may also get lot of benefits as along with capital they provide monitoring or management skills. 
  4. Firm is not liable to pay interest to angel investor                   Disadvantages are as follows:               1. It consumes a lot of time of entrepreneur to find a suitable business angel investor.                          2. Angel investor is suitable only for a business that has limited budget. If it requires huge amount of capital this is source is not suitable.                         3. Less structural support may be available from a business angel than that if an investing firm.