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Who
Are the Business Angels?
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Business angels are private
investors also called informal investors who invest in unquoted young
entrepreneurial companies. These wealthy individuals are usually former
entrepreneurs or executives. They provide not only finance but experience and
business skills.
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Business angels are active, in
one way or another, in every country worldwide. This type of investor is called
a
business angel
because many perceive that they save struggling firms with both finance and
know-how when no one else will. Though angel investing has both its
advantages and
disadvantages, it is widely agreed that the advantages of business angels
generally outweigh their disadvantages, making an active informal venture
capital market a prerequisite for a
vigorous enterprise economy.
Venture
Financing Funnel
Venture
Financing: Key Documents
The Scale of
Angel Investments in Young Firms
According to a recent Global
Entrepreneurship Monitor's (GEM) Executive Report informal private investment in
emerging and new business dwarf the more formal venture capital outlays.
Informal investors funded 99,962% of all business and supplied 91.8% of the
total amount invested in GEM nations. Totally, around US$400 billion was
invested in over 30 million companies.
Across all
GEM countries about three in every 100 adults have invested in someone else’s
business during the last three years. Of those investors, 43.7% report that they
invested in a close family member’s business, 8.9% in a relative’s, 29.2% in a
friend or neighbor’s, 8.9% in a work colleague’s, and 9.3% in a stranger’s.
For the United States alone,
business angels put dozens of billions dollars behind dozens of thousands deals
every year. The population of business angels in the country grows very fast. In
the European Union, it's estimated that at least one million of potential angels
represent a total investment pool of Euro about 20 billion.
In average, business angels
fund 30 to 40 times more start-up ventures every year than
venture capitalists.
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