The Power of Owning your own Corporation

Finance From The Heavens

If you are the owner or CEO of a large corporation you are in a unique position to potentially become an angel investor. Angel financing describes predominantly individual investors who will place personal funds into a business as an investment, in return for an equity share or convertible debt in most instances. Although the term angel investor is used to describe individuals, there are growing trends for groups of investors and business to begin angel investing.
These methods have many favourable outcomes, as groups will often share different areas of expertise meaning they will have a greater pool of research and knowledge at their disposal, as well as the power of additional capital. This can greatly increase the prospects of both an investment into a business being successful as well as increasing the likely equity returns at the conclusion of the investment.
From a corporation point of view, such investments and angel financing initiatives can help to add value to both the investor business and the organisation or individual which has received the investment. Bringing an additional organisation into an umbrella group can have long term benefits all round.

Making The Most Of Angel Financing

Angel financing traditionally carries a very high risk factor, and with this in mind it is best to only look at prospective investments which are liable to carry a return of at least a factor of ten. The reason for seeking out such a high equity return is that there is potential for a lot of angel investments to end in a total loss, particularly when the funding has been placed into new start up businesses. The high returns yielded from successful investments means that those involved in angel financing remain profitable despite having a number of investments in businesses that have ultimately failed. With all of this balanced, angel investors can over time typically expect to achieve profits of between 20 and 30 per cent.

Timescales

For a tenfold return it is recommended that angel investors look for a clearly defined exit strategy within a business which allows them to make these returns within a five year period. There is however a growing trend within angel financing for investors to seek much higher returns, such as at twenty or even thirty times the initial level of investment to further counter balance unsuccessful investments, as well as increase overall returns. These higher yield investments are usually over a longer period, generally up to ten years.

Angel financing includes individual investors who place personal funds into a business as an investment, in return for an equity share or convertible debt.

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