You can become a business investor or angel investor if you have a certain level of liquidity. It is generally advised that a business investor should invest only ten percent of his/her total investment portfolio in private equity investments.
Investors who are experienced in the field would be able to pick out proposals that seem promising. A business investor can take an active part in the management of a company he/she decides to fund and possessing the skills that are required to a run a successful company, then is it inevitable that the investment, the entrepreneur and the company will be a success.
PRECAUTIONS TO BE TAKEN
Tax advice, due diligence and business plan assessment should be performed by experts and professionals in the field.
Investors get back returns on investment in form of capital gains, dividends and fees. The nature by which returns would be paid to investors has to be decided and clarified at the time of drawing up of agreements.
A business investor should perform a thorough background check on the entrepreneur, his company, management team and other top officials. The company has to be checked for insolvency, bankruptcy etc. by investors and their complete track record should be studied in detail. Ensure that the company you plan to invest in has had no links to any fraudulent deals. Experience and expertise are required in this field and it would come with time.
Prospective entrepreneurs should be kept on hold while investors perform detailed checks and study of proposal. Novice business investor should not be impatient to invest in any company that comes his way. Investors should save their enthusiasm and willingness to invest for the right project and proposal.
INVESTMENT OPPORTUNITIES FOR THE
The business investor has a wide choice to decide where and what he wants to invest in. He can go through small to mid sized business owners inclusive of start-ups from a wide range of industrial sectors. Investors can take their pick from manufacturing companies, property opportunities, commercial property etc. Most of the proposals would be those which are not eligible for venture capitalists due to their small size, models of businesses that do not interest traditional financiers like bankers, thus investors are sure to come up with many innovative, interesting and unconventional business proposals.
INVESTMENT OPPORTUNITIES FOR THE
Angel investors are people from whom capital can be acquired. Mostly, these kind of business investors are in search of companies or proposals that have high growth potential and prospects. Companies seeking angel investments should be accommodating and willing to relinquish control over certain aspects. Every angel investor has different terms and conditions and hence it is wise to ensure and provide them an ‘exit’ route while drawing up legal papers. Exit routes can be either in form of IPOs or buyouts. Angel investors are ideal for companies that are seeing an increase in service sales and products. These companies require additional funding to bridge the gap between sale of goods and receipt of money from customer. Angel investment in a company would be a minimum of 10% of the company’s equity or if it is an early stage company, the investment can increase up to 50%. Most angel investors do charge an additional management fee as monthly retainer.