Because the conventional lending markets become much less and less willing to buy startups, angel and early stage investors are getting more and more important to businesses. The banks continue to maintain credit tight, and individuals with excellent business ideas are finding it quite hard to find startup capital or early stage business growth cash. That’s where angel investors have been shown to be invaluable because they match a market need for company backing. As the investor gets a chance to make higher returns since the company receives the necessary cash it’s a win-win situation.
Meeting Financial Challenges
Securing the appropriate level of funds for business startup is really one of the very difficult challenges every business and every new business must make do with at some stage. For this reason investors hunting for higher returns are really so important in any market but particularly within an economic slowdown. The tight credit market has resulted in the growing significance of bringing new businesses and private investors together, which is where angels enter.
These investors are eager to put money into new companies understanding they have a better chance of getting a higher rate of return than could be made in the conventional markets. The investor receives the required rate of return along with the company receives the capital it desires. They’re called “angels” because they are prepared to purchase brand-new businesses which do not have a monetary history yet or have not been analyzed in the market.
There were about 25,200 company owners financed by angels.