Angel investor is a term that is not widely known to the general public. In fact, the meaning behind what an angel investor is quite important. Especially if it is related more deeply to the emergence of new start-up businesses in the country. So it is certainly interesting to know more about what angel investors are.
Generally, the term angel investor is widely known by both start-up founders and business people in the business world. Because often the actions of investors are more related to businesses that have just been built. Check out the information below to find out more clearly about what an angel investor is, what types of angel investors are and what are the advantages and disadvantages of angel investors.
Also read: Top Venture Capitals & Angel Investors in Singapore
What is an Angel Investor?
Starting with an understanding of what an angel investor is, because it has invited a lot of curiosity in the past. An angel investor is someone who is so rich that he or she can provide a large amount of capital for a business. The main target for angel investors is start-up businesses in exchange for a portion of the business shares.
Another interesting thing that can be obtained from angel investors is their characteristics. The hallmark of angel investors is an attitude that focuses on supporting start-up entrepreneurs to develop further. Therefore, many people think that this angel investor can also be called an angel financier in the start-up business..
The difference between venture capital and angel investors is the focus of the targeted start-up business. If angel investors are targeting start-up businesses that have just started, venture capital will focus on start-up businesses that are already established and will be developed. Therefore, angel investors usually give their funds to new start-ups.
Types of Angel Investors
Types of Angel investor (source: Freepik).
As said earlier, angel investors are usually those who are generally quite close to the business owner. Departing from that understanding, the types of angel investors can be classified. Here is a discussion of what the types of angel investors are.
1. Family and Friends
The first type of angel investors are those who still have a close relationship with the business owner. Generally, they are close friends or even a family member.
Usually this type of angel investor is the main choice for business owners. Because it is much more trustworthy and reliable. Therefore, a business often tries to get investment from family and closest friends. Regardless of the close kinship relationship, the agreement that applies between the investor and the business owner is still a valid business agreement..
2. Group or Community
The next type of angel investor is a group or community of investors. Even today in Indonesia there is an official community that houses this angel investor. For example, Angel Investment Network Indonesia.
Through well-organized groups and communities, the distribution of capital funds can be carried out properly. In addition, the funds collected can also be greater. So this type of angel investor is a promising investment alternative for new entrepreneurs.
3. Rich person
The next type of angel investors are those who have too much money or are rich people. In fact, it is often found that some rich people are deliberately looking for a place to invest their funds. So that later this will provide even greater benefits for them.
Therefore, it is not new for successful business people with lots of funds finally offering to finance certain businesses. Moreover, generally people like this have a wide business network. So even though it’s rare, when you get this kind of angel investor, it can be quite valuable.
Also read: Long Term Investment: Definition, Risks, and The Examples
Advantages and Disadvantages of Angel Investor
Of course, there are some advantages and disadvantages of angel investors to understand. Especially for start-up business owners who plan to get this kind of investor. For more details, here is some information about the advantages and disadvantages of angel investors.
One of the advantages that can be obtained from the first angel investor, namely angel investors who come from family or close relatives, is that the investment obtained does not have to be returned. Given that this one investor generally comes from the closest people. So that when you experience a loss you don’t have to worry about returning a certain amount of funds that have been injected as capital.
Apart from these advantages, angel investors also have disadvantages. Because angel investors are the main investors in the startup business, indirectly there will be many things and business decisions that will generally be influenced by the decisions or approvals of these investors. Another drawback is that the ownership of some of the company’s shares will also be owned by investors.
That’s a little explanation of what angel investors are. From the information provided above, it is quite clear that angel investors are important figures in the start-up business. In addition to the explanations related to angel investors that can be found in this article, there is also some interesting information regarding the types of angel investors, to a discussion of the advantages and disadvantages of angel investors. Thus, as a start-up business owner, you can get more accurate information regarding this angel investor.
