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The Angel Business Finance Advantage: Why angel business investors provide value-added funding to mid-size and start-up companies?

The common denominator of the angel investor and small business is that both are interested in the early stage of business development.  The basic tools used by entrepreneurs searching for start-up capital are a strong personal connection with lenders, which leads to fruitful relationships and ultimately funding.

Many individuals don't realize that angel investors can provide significant funding for companies in the phases of:

Put yourself in the shoes of a small and mid-sized business owner who needs cash to bridge the gap between raising funds and turning the business plan into action. How might this business owner, who is already burdened by heavy debt and having a difficult time making ends meet, react if he or she were to learn that angel investors were actively funding other businesses? This is something that fewer business owners know.

Another obstacle to raising funds is the Due Diligence and interview process.  The owner of a small business must produce a solid production and prove the value of the products or services that are the foundation of their business. If the product does not move, the investment by investors is in vain.  The owner of a middle-sized company may have an established relationship with an angel investor, but this relationship is not obtaining the business needed to survive and grow.  When it comes time to choose a large investor to fund a business, the owner must firmly insist that the investor candidate is experienced, well-capitalized, and well-receptive to the needs of his/her investment.

The typical due Diligence interview requires the subject to bring a business model that will help make the required cash flow.  The entrepreneur is asked to substantiate the forecast and show how this forecast will be met. Each investor also must outline his/her own attitude toward the consolidation of debt and how he/she will maintain control.

The robustness of the business plan is extremely important at this phase in the life of the investor because business plans must be able to justify the expected rates of return.  It is important to know the expected variables on the return of investment and the expected level of risk.  The more comfortable the investor is, the more willing he or she is to invest.  While there are plenty of angel investors, they will accept investment opportunities only if the proposed business has promise.

After the business plan has been constructed and a lender or finance company has agreed to fund the business, the owner is faced with the task of raising the money at the start of operations. Fortunately, for small business owners, there are multiple financing options.

Over-draft Facility: ally, a business can draw against its over-draft line of credit anytime; however, no interest accrues.

Business Line of Credit: the documentation required to establish a business line of credit is much less stringent than for an angel investor.  There are a number of fast, convenient options available.  A business needs to draw down a specified amount on its line of credit, but no interest accrues.

Since angel investors play such a significant part of off- waivers of loans, Without this Aloof Capital source, many of these businesses would not be able to function.


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