Angel investors constitute a great opportunity for start up businesses. They provide necessary funding for the companies in their early stage of development. In general, as there are different types of entrepreneurs, there are also different types of angel investors. In consequence, also the expectations and views on certain things can be incompatible. Although it may seem somewhat paltry, it is actually very important to find the right type of investor, so as to avoid unnecessary disagreements and conflicts. Thus, the aim of our article is to inform what types of angel investors we can choose between.
There are 8 main categories:
- Typical Angels – experienced individual businessmen who have gathered their capital throughout their whole business career. Their own rich experience is as significant for your company as their wealth. They tend to invest despite high risk and choose various industries. They can become precious advisors for the young companies in which they invest.
- Entrepreneurial Angels – these are successful businessmen who run their own businesses and have a steady cash flow which allows them to invest despite of the high risk. They not only provide a great amount of capital for startups, but they also become assistants for the beginning entrepreneurs. They are usually not interested in managing a company.
- Analysis Angels – they often want to receive a board position and implement the same policy they worked according to in their own successful companies. They usually do not take an active management role, unless the situation of their invested company is worsening.
- Corporate Angels – the group of business executives from huge corporations who have been downsized, replaced or retired early. Generally, what they look for in investing is mainly financial benefit, but apart from this they can also see their personal interest in the investment, which is for example, getting job at the company.
- Trend Angels – they are less experienced than typical angels and they eagerly invest in new technologies. They aim at bringing modern technology to the market and are not afraid of the potential risk. Some of them do not want to be actively engaged in their invested companies, since they want to avoid the whole every day process of operating a business.
- Professional Angels – the group of employed professionals such as doctors, lawyers etc. who invest in the familiar fields. They can offer their invested companies professional help. They usually provide the initial capital, rarely make next investments.
- Enthusiast Angel – the older type of investors (at the age of 65 and more) who treat investing as a hobby. They usually make many small investments in different companies. They do not want to engage in managing companies.
The financial reward is of their main interest in investing. This type of angel prefers investing in the times of the market’s prosperity and stability. Numbers Angels usually do not want to be actively engaged in their invested businesses which they treat rather as a next position in their portfolio.