Business angel
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Business angel is a private investor, usually former entrepreneur, who is investing his own capital in innovative start up business in order to achieve above average returns. Business angels provide capital in exchange for share in company.
Business Angels activity
Business angels are private investors who provide capital to start-up businesses in exchange for a share in the company. They typically have experience as entrepreneurs and are willing to invest in risky projects that may have difficulty obtaining funding from other sources. Business angels not only provide capital but also offer advice and connections in areas such as management, strategic planning, and company organization. Business angels often form networks to connect with companies seeking funding, but most contacts are made informally. The informal nature of the relationship between a business angel and a financed company can result in varying investment periods and conditions for each individual case.
Role of business angels in financing Small and Medium Enterprises (SME)
Business angels play an important role in financing risky projects which have difficulties with gaining capital from other sources.
Business angels besides providing capital also helps companies with advice and contacts in such fields like management, strategic planning, organization of company, suppliers etc. Business angels organise small networks in order to get in contact with companies seeking for capital, but majority of contacts are made informally.
Informal character of cooperation between business angel and financed company has impact on investment period and condition of collaboration which can be different in each case.
References
- Maxwell, A. L., Jeffrey, S. A., & Lévesque, M. (2011). Business angel early stage decision making. Journal of Business Venturing, 26(2), 212-225.
Author: Krzysztof Nadzieja
