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Angel Funding:
Angel funding serves as a special avenue of financing for small businesses that have unique growth opportunities but are not necessarily ready for traditional financing. In these situations, the financiers are known as “angels”. Angels are SEC accredited investors who have a net worth of at least one million dollars and/or a yearly income of at least two hundred thousand dollars. Over the years organizations comprised of multiple angels, called Angel Groups, have been developed to provide exceptional local entrepreneurs in their community with the capital and knowledge to build thriving businesses.
A national menu of national Angel funding companies can be found at 99 Fundng, Invstor.com or Equity.net. In San Francisco check the San Franciosco Angels list, SF Angels, SF Angels Group. In Los Angeles view the Los Angeles list, in Chicago view the Chicago Angeles list and Hyde Park Angels.In New York there are New York Angels and Golden Seeds and Westchester Angels, has recently been formed due to the vast opportunities and demand in their local community. In Miami check the Miami Angels List, Tamiami Angel Funds and SFTA. In Texas The Houston Angel Network and San Antonio Angels list.
These organizations are very unique because they can provide access to capital from various angels of who can sometimes serve as either mentors or advisors for the business they invest in. In these types of transactions angels will usually invest a few hundred thousand dollars in the form of either convertible debt or straight equity ownership in the business.
The upside to this form of financing is that businesses are exposed to a wide network of capital providers who have a special expertise that can help their business succeed. The downside however is that in these types of transactions loss of a certain percentage of ownership is usually inevitable which can sometimes lead to conflicts related towards the direction of the business or other factors.
The three options of financing discussed in the previous paragraphs are among many that can be researched and pursued. It is up to the business owner to understand which options make most sense for their business. Understanding the different forms of financing and recognizing the appropriate options are some of the most important components of proper cash flow management.
Disclaimer- these funding institutions do not represent a full list of finacial companies. The intent of the article is to share a cross section of companies to be discussed and vetted with your CPA or finance professional. Latin Business Today does not endorse funding institutions.
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