Angel investors and their working

1. Angel investors and their working The start-up culture is currently booming in India, and its emergence has introduced people to many new trends. One such trend is that of angel investors. How are angel investors related to start-ups? Angel investors seek to make investments in entrepreneurs in their early stages. Angel investors have designated money for which they seek investment possibilities that would yield higher returns than those offered by conventional investment opportunities.

2. Since they frequently invest in the entrepreneur launching the business rather than its viability, angel investors offer more favourable conditions than traditional lenders. Instead of concentrating on the potential wealth they might make from the company, angel investors help businesses take their first steps. Angel investors are essentially the antithesis of venture capitalists. Angel funders, private investors, seed investors, or business angels are other names for angel investors. These wealthy individuals fund new companies in exchange for ownership stock or convertible debt. Some angel investors raise money online or through private investment funds. Working on Angel Investing Angel investors prefer to get engaged at a business’s “seed” or “angel” fundraising stage. The angels prefer to invest in a business idea that is still an infant, and mostly the initial funding comes from the company’s parents. Post the initial investment made by the company owners, all small businesses need significant investment. To secure this finance, they reach out to the angels and, in some cases, venture capital firms. Their contribution is essential to expand a business at a crucial (and typically early) stage of development, especially when initial finance is on the verge of drying up and before venture capital firms express an interest in partnering with a potential company.

3. The process: Young, developing enterprises are introduced to angel investors by word-of-mouth, business and industry seminars or conferences, referrals from specialised investment organisations, internet business forums, or local events. Suppose the angel investors are interested in the business idea. In that case, they interview the business owners to know about the development plan, how the business owner plans to use the investment money, and also go through all the business’s legal documents. After a formal discussion between the business owner and the angel investor, a term sheet of the investment is prepared in which stock percentage, investor’s rights and safeguards, governance and terms control criteria, and a possible way out of the asset for the investor are all spelt out. The deal is formally closed. The investment funds are delivered for the company’s use once the contract is finalised, and an honest legal agreement is prepared and signed. Varun Thapar, Vice Chairman & Executive Directorof the KCT group, is among the emerging angel investors of the country and has been a prominent investor in Ed-tech, ML, AI, Media and entertainment. If you are a small business owner planning on taking your business to the next level, you should do it correctly.