When trying to attract people to invest in your start-up, you benefit from having the financial support to achieve your vision and build up your profile. If you wonder what angel investors gain from putting their money into your start-up, then read on to find out.
A Chance to Make a Profit
Angel investors give money to a start-up. This is in exchange for a share in the business that has the potential to make them money. Therefore, for angel investors to invest, they have to see promise in a completely new idea never done before or a fresh take on a current idea. This is why David Spector of ThirdLove convinced several angel investors to put their money into the business. The bra and underwear company that he and his wife founded together was inspired after they saw a gap in the existing market and created their business to fill that gap.
An Investment They Have More Control Over
If angel investors have money to invest, they often prefer to put their money into a start-up. Then they have a say over some of the decisions, and they offer their experiences and help to influence the financial income. Other methods of investment offer less control and are more unpredictable.
Attaching Their Name to a Successful Start-Up
Angel Investors do research and have the knowledge to spot whether a start-up has strong potential. Therefore, while there may be no guarantees in business, their experience tells them how likely the start-up is to be successful. Having their name linked to that success tempts them into investing.
Being Able to Vary the Portfolio
If angel investors already have impressive portfolios in one or more areas of business, they might want to vary their portfolios by financing a start-up in a different area. They still want to choose one that they can help to grow and make money for themselves and the founders. However, they might have less experience in the specific industry that the start-up focuses on, which makes the start-up an attractive investment.
The Chance to Make a Difference
Besides owning a share in the company and building their own reputation, angel investors may want to make a difference. They invest in a start-up where the values align with their own, or where the founders openly support and donate a percentage of their profits to a specific cause. So, although angel investors still benefit in all the ways mentioned above, they have the chance to make a difference at the same time. For business leaders with solid reputations, no longer motivated by money, it is a good way to give back.
Final Comments
Finding angel investors to invest your business might seem like giving up some control. However, there is a better chance of your start-up succeeding and within a smaller time frame. Then you are able to act on current trends and gaps in the market, without having to wait until it is too late.
