Angel investment and crowdfunding have both become popular methods to raise money for start up businesses and it isn’t hard to see why. Today, there are sometimes limited options available when it comes to injecting money into a new business because let’s face it; there are not many people who are willing to take a risk. However crowdfunding and angel investing could provide most with a new and exciting way to raise cash for their start up.
What Is Angel Investing?
Angel investments are simple. The people who offer angel investments are usually individuals with business experience and usually have their own company. The typical investors have a high net-worth and are happy to lend a hand to newer businesses. However, in exchange for the investment money they will take a stake of the business. Basically you get an investment and they take a few of the company’s shares. This means they have a stake in the business. Angel investing can be one individual or a group of individuals looking to invest.
Is Angel Investment Risky?
This isn’t a loan so that when someone invests money into the business they are not going to demand repayment. In a sense it isn’t overly risky because the investors have an idea of what they are getting into. This is technically an investment for them and as most will know investments is always a risk. However, for business owners and those looking to get their company off the ground, this can be a good option to consider. Of course, while you might not be the one who takes the risks, there is still an expectation to succeed and sometimes investing companies or individuals are hands-on.
Raising Cash with Crowdfunding
Crowdfunding is a lot different from angel investments. Anyone can raise money through the use of crowdfunding websites and platforms but there are some restrictions. Usually businesses can’t raise more than one million in a single year and the fees can be a little problematic. However, this can be great for those who don’t want a partnership and don’t want to have that added pressure of succeeding within a year. Investors can be anyone from all walks of life and when they visit crowdfunding websites and see an idea they like the look of, they invest. Find out more here.
Which Is Best?
To be honest, both Angel investing and crowdfunding are impressive. They offer different things which can in fact be great. It doesn’t make the decision harder but rather less complicated. As most will understand, every business is different in terms of what they need to run and how they operate. Some businesses will benefit from looking at angel investments while others will benefit from crowdfunding. It comes down to the individual business.
Make an Informed Decision
This is not going to be an easy decision to make because you want to raise money for your start up business but want the method which is suitable. Now, if you don’t want to hand over shares then crowdfunding is the way to go; however, that being said, if you need help to direct the company in the right way angel investing is necessary. Again, it needs to come down to what is best for you and your business. If crowdfunding isn’t working then angel investing might be the answer.