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What are Angel Networks?
One of the many challenges for a small company looking to
grow is securing the necessary capital. New companies are
often limited in the ways they can raise this capital, as
they are rarely able to receive bank loans. Most companies
are founded with the entrepreneur’s personal resources and
that of their friends and family. Because this is often
insufficient, the entrepreneur must look to other sources
for funding. One such source is an angel investor.
Angel
Investors
An angel investor is an individual with a high net worth
that is interested in providing funds at various stages of
the start-up and growth process in return for a significant
return on investment. They typically seek companies with
high growth potential, innovative products or services, and
strong management. Their involvement with the company varies
based on the personal preference of the investor. Many angel
investors choose to play an active role with the company,
such as taking a management position, serving as an advisor,
or sitting on the board of directors. An average angel
investment ranges from $10,000 to $500,000, but can approach
$1 million.
One difficulty in working with angels is that they are not
easy to locate. Most value their privacy and are not open
with investment interests. Oftentimes angels are located by
word of mouth, or through professional intermediaries.
However, recently there are organizations throughout the US
formed for the specific purpose of bringing together angel
investors and entrepreneurs seeking funding. One type of
entity that facilitates this meeting is an angel network.
Angel
Network
An Angel Network is a loosely defined group of organizations
that work to introduce entrepreneurs to possible investors.
Typically non-profit groups, angel networks vary widely in
size and composition. Some groups involved in a network are
businesses, government agencies, academic institutions,
economic development organizations, and for-profit groups.
These networks do not act as brokers or investment advisors,
nor do they take part is structuring transactions. Their
role in the angel-entrepreneur relationship disappears after
the initial introduction.
The following websites provide additional information on
angel investors and networks:
Allbusiness.com
Site
containing a variety of articles related to angel
investors including information on what makes an angel
invest, and how to contact an angel. |
Inc.com
Contains articles about angel investing such as the dos
and don’ts for entrepreneurs seeking angel investors. |
To learn about angel networks serving the central
Pennsylvania, contact:
Susquehanna Investor's Network
Venture Investment Forum
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