I get several questions regarding Angel funding from some of the startups that I advise. Here are a few insights from my experience in speaking to #angels/ #VCs and other #entrepreneurs:
Q1. For a startup seeking funding, what are the advantages of going with an angel investor over a VC?
Angel investors often fill the gap between when your company is bootstrapped (i.e., self-funded), and before you are ready to go for VC funding. The funds that an angel will invest are lower, their investment horizon often longer, and they are more patient with the timing of their exit. They usually look for a 20–30% return over a 5 to 8 year period. Venture capitalists generally look for a multiple (say 8–10x ), of their investment. They often provide useful connections and advice that help grow the business.
Q2 on #Angelfunding 2. Are there any disadvantages of seeking funding from angel investors?
The disadvantages that I have seen are that at times, Angels may want to get involved in the strategy of the business and could get nitpicky. An #entrepreneur would need to set the boundaries of involvement early on!
Also, the amounts involved are often in the USD 10,000 to 200,000 region. This lower funding amount could mean that your company could end up with a “crowded” cap table, an
