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Angel investors are an excellent source for funds if you have a business idea that needs funding.  The articles below discuss some of the benefits of using angel investors.

“Angel investors are becoming the dominant force in consumer internet venture capital”

Bill Burnham, hedge fund manager and former VC:
“Angel investors are becoming the dominant force in Consumer Internet Venture capital. The vacuum created by the withdrawal of VCs from traditional Seed and Series A opportunities in the Consumer Internet space has been filled by a motley collection of angel investors.

It is angel investors, not VCs, that are writing checks based on good ideas, business plans, and “alpha sites”; not VCs. The importance of angel investors is such that it is not unusual these days to see an internet startup publicly announce its round of angel funding, when in the past such events did merit a public mention. Yes, angel investors have always provided seed money, but they today they typically provide 100% of what was once considered Series A money as well.”    –more

What is involved in securing venture capital?

Entrepreneurs and business owners have great business ideas but often they do not have the capital to complete their transaction. They spend a lot of time searching for angel investors, seed capital, early stage financing, mezzanine financing. The cheapest way to start a business is to beg borrow from family, friends and use the equity of your house or credit cards. Although credit card interest rate is high, it is still cheaper than venture capital financing.

Venture capitalists are individuals or pools of funds looking for businesses which have an excellent opportunity of succeeding. They typically finance later stage businesses but there are some funds around who will invest in early stage businesses. Venture capital firms typically take an equity stake in the business, a board of director seat, a return on their loans which they want repaid and a percentage of the profits of the business.

Venture capital firms and angel investors take risks and for that they want to be rewarded very well. To compensate for their risks, they look for a high ROI (return of capital). For every 10 investments made by a venture capital firm, they are hoping that two will be extremely successful, a few will break even and they will lose their entire investment on 2. As a result, the ones which succeed must more than make up for the losses on the other investments. Venture capital firms will monitor the business closely and if the budgeted sales and expenses are not met, they will become more active in the business and could take over the business if the business deteriorates significantly.    –more

Related angel investors articles

• Angel Investments Take Time and Terms (startupprofessionals.com)
• Royalty-Based Venture Financing, Born in Boston, Could Shake Up VCs and Startups from New England to the Northwest. (xconomy.com)
• VC needs to leave the Internet (vator.tv)