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If you need financing for your high-risk business, but can't find a venture capitalist to work with the small amount of financing you need, consider an angel investor. Angel investors can provide under $1 million in financing (which many venture capitalists won't even deal with) in exchange for ownership equity.
What Will They Want? An angel investor knows there is a chance that your business could fail, taking his money with it. So it's understandable that the stakes are high. Angels typically look to get a return of 10 times or more on their investment within 5 years.
While this seems exorbitant to many, angels should be considered if you can't get a traditional bank loan due to the volatility of your company. If you believe it will grow, an angel investor can give you the financial backing to make your business a success.
Many angel investors work in groups, to collaborate their funds and research efforts. If you are a high-growth startup, and have received some financing, but still need more, angel investors may be able to help you secure the investment you need to develop your company.
The Downside: Something to consider if you are thinking about working with an angel is that you will have to relinquish some control over your company. Some entrepreneurs find this difficult to do, and would rather find other means of financing and keep full control of operations.