Benefits for Angel Investors

by Chris Joseph

Angel investors are typically successful businesspeople or investors who make money by investing in small start-up companies, usually consisting of 20 employees or fewer. Angel investors provide additional capital needed to get the enterprise off the ground, as well as their business expertise and savvy to the entrepreneur. Being an angel investor can offer a number of important advantages.

Greater Investment Control

As an angel investor, you can experience greater control over your investment outcome than with other types of investment vehicles. Unlike stocks, bonds or mutual funds, you don't have to sit back and hope the market reacts in a favorable manner. If you're investing in a start-up enterprise where the entrepreneur is a business novice, but an expert on the product, you may be able to assume a highly active role in managing and directing the business while the owner focuses on what they do best.

Fewer Hassles

Angel investing offers many of the advantages of business ownership without having to bear the burden of starting the business from scratch. The business owner is responsible for developing the business concept, creating the business plan, obtaining the location and any necessary permits and licenses. Your role is to provide additional capital and provide the expertise necessary to make the business a success. While you risk losing your investment if the business fails, the business owner could lose a lot more.

Financial Rewards

Being an angel investor can come with significant financial rewards. Angel investors typically receive at least a 10 percent equity share in the enterprise, as well as additional managing or consulting fees. Once the business becomes established and successful, and the owner is able to assume full control of the operation, the angel investor may be able to step back a little, while still sharing in the profits.

Helping Others

In addition to the potential financial rewards, angel investing can also provide emotional benefits. You can attain the satisfaction that comes from helping others achieve their lifelong dream of business ownership and success. You may also enjoy passing on the knowledge and skills you've gained from your own successful business experiences. Helping others to start a business can encourage entrepreneurship, which can benefit the economy as a whole.

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