Angel investors and how businesses can benefit from them in Nigeria
The word “Angel” used here has no literary connotation. Instead, we are referring to a group of investors who focus on making high-risk investments since they are aware that risk carries a correspondingly larger reward. A group of people known as angel investors band together to provide startup capital. They are also referred to as seed investors or business angels. They agree do this in return for debt or shares in the company. At this time, angel investors can be found anywhere in the world—in Africa, Europe, America, and the U.K. They exist here in Nigeria as well, but the main issue has been the lack of information available to people who should benefit.
Over 80% of new firms fail in their first year owing to a lack of funding, according to studies that have been conducted time and time again. Any firm depends on money to survive. Even the best business idea is insufficient. The long path from a simple business idea to a company that generates income requires sufficient funding. Platforms owned by angel investors are organizations that strive to support capital-based businesses by making investments in them; they have been a significant source of funding for startups in their early stages.
The significant level of risk associated with investing in a firm early on makes it less desirable for financial institutions. As a result, business owners use equity financing to raise cash flow or collateral. Between entrepreneurs’ savings and venture capital funds, angel investors fill the void. These investors, who are business leaders, serial entrepreneurs, or have prior knowledge in the field, don’t just inject money into the firm and wait for it to succeed. In order to assist businesses in getting through the early stages, they provide a wealth of expertise and share their knowledge at crucial times.
It’s no secret that growing firms need to raise money for pricey endeavors like product development or market expansion. Therefore, they would profit from the financial investment as well as the knowledge and counsel of angel investors.
Why you should consider Angel Investors as an option to fund your business ideas, and how can your business benefit?
- They finance high-risk ventures.
By these, we mean companies whose extensive gestation periods make it obvious that banks won’t even consider financing them. Banks only offer short-term loans, but angel investors do so because they see a high return on their investment (ROI) in high-risk ventures. These kinds of businesses significantly boost the economy and, when successful, grow to be significant labor employers and very profitable enterprises.
- The current business fad is angel investment.
By this, we mean that unlike what most people believe, a large number of high-net-worth persons in Nigerian society today who are captains of industries do not use their own wealth for investments. The majority of their investments are made through venture capitalists or angel investors that support their concept and vision.
- There is no cap on the amount that angel investors can invest in your company.
The amount of money needed that cannot be raised by angel investors typically has no upper limit. They have access to a big pool of funds since they are trusted specialists who will use the money as efficiently as possible.
- Angel investors give you access to important industry relationships and knowledge.
Angel investors give value to a firm in addition to providing it with finance. The majority of angel investors are seasoned investors with extensive knowledge of the industries they invest in, so they may also offer contacts and advice to help startups expand. Business angels don’t just give you access to their network of contacts; you can also call them and ask them to take part in a negotiation with you if you need the assistance of a more seasoned expert, for instance. They support you throughout the process since they care a great deal about your startup.
- Angel investors don’t demand interest or repayment on their investments.
In this situation, things are very different from how banking institutions see it because business angels provide businesses with the capital they require for expansion. In return, they get an equity part in the company, often 10%. Both parties will profit if the startup grows as anticipated. Otherwise, angel investors do not get their money back.
- Angel investors give your company a lot of credibility
Angel investors are frequently recognized authorities in their professions who have established reputations after launching numerous profitable enterprises. Founders of startups can benefit from this. Working with individuals who are well-known in a given field might work as a catalyst, greatly accelerating the growth of the startup.
- Angel investors can provide your company a bird’s-eye view.
There are instances where angel investors “bet” their money on companies they feel strongly about. This occurs because, in addition to their own financial gain, they can see how their investment will benefit the neighborhood by generating new employment possibilities and fostering local economic growth. In their later stages, startups frequently maintain tight relationships with business angels, sometimes even after the angels have left their board. Business angels are entirely committed to assisting you in expanding once they have invested in your organization.
- From any degree of their investment, your company can profit.
Angel investors are not only a good choice for companies. They might as well join a late-stage project that is already close to success if they can make a major contribution. They are frequently willing to bargain because contracts can be flexible, allowing both sides to get the best potential deal.
- Angel investors can immediately help you develop your company’s brand.
In addition to having experience, angel investors are well-known. This may be quite significant in developing your brand. Gaining access to their industry connections can undoubtedly help in the long run, albeit it will depend greatly on the investors as some of them choose to keep a low profile. Additionally, a press statement should normally be issued when a reputable business angel or group of angels invests in your startup.
- They make investing judgments quite quickly.
Startups frequently experience instances when they require an immediate influx of funding. But as we all know, getting access to large sums of money may be difficult, especially quickly. Startup owners can receive a substantial sum of money from angel investors at the exact time they need it most.
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