People in search of equity investors

These angel equity investors are accredited investors who have money to invest in start up or have small businesses finance. Normally, angel investors provide second round business funding. Angel equity financing is opted for by businesses where debt financing is unavailable due to tight credit or risk associated with project.

Angel funding targets small businesses and demand high returns due to high risk factor associated with initial start ups and small businesses. Under normal circumstances, angel equity investors demand 10 or 30 times the amount they invest. Since angel equity investors take huge risks they expect good business plans. Equity investors conduct thorough due diligence and undertake competitive analysis of applications received from various small business entrepreneurs.

Securing an angel equity investor to invest in a project is a time consuming and complicated process

Small business owners might have to go through several presentation rounds to finally convince equity investor and secure equity investment.


To the Rescue 

Financing provided by an equity investor is by far the best method to procure finance. There is no burden of debt but business owners would have to part with the right to ownership of company. Normally, the ownership is dispersed as shares and equities. Share holders, in this case the equity investors, enjoy voting rights and are eligible to attend annual general meetings of company. Sometimes, equity investors portray an interest in getting involved with the company and begin to take part in board of directors of company.

Professional equity investors can be angel investors or venture capitalists. Venture capitalists invest in businesses and get big returns. They can invest upto 10 times more than an angel investor. Equity investors are well aware that new start up business ventures involve risks and therefore they take time and consider many factors prior to approving finance. Repayment and returns are considered only when the company begins to make profit. Hence the financial burden is largely shared between equity investors and business owners. Moreover, equity investors can sometimes bring in valuable skills, contacts and experience for assisting in decision making and strategy planning. A long term good relationship can be expected from healthy relations with equity investor.

It is wise to keep equity investors informed about various business decisions as well as use resources available through them for better prospects of business. Equity investors can do businesses a lot of good with their long understanding of industry and invaluable contacts. Business owners have to be aware that there are equity investors who demand high maintenance and show case hawk like behaviour. It is advisable to take advice of a lawyer and finance professionals prior to approaching prospective equity investor. A clear plan with strategies charted out carefully is a pre-requisite for approaching an equity investor.


Private Equity Investors 

Private equity investor have time and again proven to be an excellent source of funds for business. Private equity investors largely comprise individuals who have the skills and expertise along with money to start a business. The contacts and experience equity investors possess can prove to be an invaluable asset to new start ups. Potential growth of new business venture and the person behind the idea influences decision of private equity investor. They too demand high returns for their investments but unlike venture capitalists, equity investors have more laid out terms and conditions of payback. 

In comparison to Venture Capitalists, Equity Investors have following advantages:

  • Time taken for dispersal of funds is less than from a venture capital firm
  • Less amount of due diligence 
  • Lower rate of return
  • Does not interfere into company matters or try to take too much power with matters related to staffing, target setting and management of business