Published on December 17th, 2013 | by Jose Vasquez0
5 Reasons Angel Funding for Startup Tech Companies Isn’t Always Equal
Seeking investment funding might make you desperate for the influence of an angel investor, but these five possibilities prove that angel investments aren’t always equal.
For decades, angel investors have helped spawn generation after generation of new tech startups, providing initial funding to entrepreneurs with limited resources and unlimited dreams. As an entrepreneur, it’s both realistic and smart to seek angel investment funding in most cases—but don’t get caught thinking that all angel investors are equal or that you should blindly accept any type of funding that might come along.
The reality is angel investors come in all varieties, just like entrepreneurs. One angel investor’s methods of business and attitude toward entrepreneurs might be drastically different from the next. Be wary of the type of angel investors that are out there, and do your research so you know your investor’s reputation—before you take their money.
Keep watch for these types of angel investors:
- Predatory angel investors. These types of angel investors sniff out entrepreneurs they believe are talented but inexperienced, taking advantage of their lack of negotiating prowess or otherwise attempting to skew the deal in their favor. They’re not in it for your success at all—only theirs.
- Controlling angel investors. You have your idea and your plan in order, but if a controlling angel investor opts in for some investment funding, they might take control entirely. Angel investors who help guide you and make suggestions are good, but those who take full control are bad news.
- Inexperienced angel investors. Just because they have money doesn’t mean they know what they’re talking about. Make sure your investors are reputable and know their way around a business.
- Critical angel investors. A little criticism is good, but some investors have a superiority complex that leads them to excessive, unhelpful negativity. Don’t get caught in it!
- Non-angel angel investors. There are lots of people out there posing as investors or investment brokers to try and take advantage of young startup tech companies. Don’t be misled!
As in everything else in your business, do your research and know what you’re dealing with before you take the plunge. The more you know ahead of time, the less likely it is that you’ll wind up regretting your decision.
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