tag:blogger.com,1999:blog-18465304274616750052024-03-13T08:06:29.475-07:00SA Angel Investors BlogAngel Investment in South AfricaBen Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comBlogger47125tag:blogger.com,1999:blog-1846530427461675005.post-42438748085888207532016-08-09T09:22:00.002-07:002016-08-09T09:22:18.659-07:00Finding An Angel Investor Is Not the End of the Search!<div class="MsoNormal">
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">With all the press that <a href="http://www.caban-uk.co.uk/">angel investors</a> are getting these days, many would be business owners and entrepreneurs probably think that finding an angel investor is the answer to all of their prayers, and the end of their search for funding. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">While that may be true for a small number of entrepreneurs, the reality is that many entrepreneurs who receive angel funding still have to face traditional financiers and venture capitalists at some stage. In this article, we look at what angel investors do, and why you might still have to search for funding again in the future. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What Do Angel Investors Do?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">There are many different types of angel investor out there, and while some do offer full financing for the companies they back, the majority offer what is known as seed capital to start ups. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Seed capital is usually a small amount of capital, which gives an entrepreneur the funding they need to start their business, and get it off the ground. It’s often enough to get your business from an idea to the start of profitability, but in many cases, once you reach profitability, and you want to expand, you will need to seek additional capital.<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">That additional capital is often referred to as growth capital, or first round funding in the world of venture capital. It builds on the start you’ve made with angel funding, and it’s often as necessary as the capital you need to start your business. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What’s the Point?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">If you’re shocked to find that you might still need to look for traditional or other funding later on, and you thought that angel funding was going to solve all your problems, you’re probably wondering what the point is. Why bother to find angel funding if you’re only going to have to find more funding later on. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Well, the simple fact is that angel investors are often much more likely to finance new, untested businesses. They may also have a much higher risk appetite than traditional financiers, and they’re probably more willing to invest in your idea than anyone else is. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Angel investment is often the stepping stone you need to take your business from idea to working concept, and once you’ve proven that it’s a solid idea, and that it can make a profit (and you have the results to back up your claims), you and your business will be much more attractive to traditional financiers!<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What to Expect?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">When you work with an angel investor who is offering you seed capital, there are a few things you need to bear in mind. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">First, you need to realise that often, angel investors provide small amounts of funding. Since angel investors are often private individuals, and often someone you know, you probably can’t expect huge amounts of cash! Some of the biggest companies out there got their start thanks to angel investors, but they only received a few hundred dollars in some cases!<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Angel investors will usually also want to be involved in some way. Most will expect regular updates on your progress, and some will want a more hands on role, but nearly all angel investors will expect an equity stake in your company. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What’s Next?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">The goal with angel finance for start-ups is to give you just enough cash to turn your business idea into a profitable reality. Once you’ve done that, and have been running your company for a while, you will probably need to approach a financier with your business plan, and proof of your results. At that point, you might pay your angel investor back for their investment (plus interest or any other fees they may charge you) or they may decide to retain their stake in your business. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">However your angel investment deal is structured, however, and whatever you need to do later on in terms of funding, it’s important to remember that angel investment probably won’t be the last time you seek funding, so think of it as a stepping-stone, rather than a finite solution!<o:p></o:p></span></div>
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-71761958848979061102012-07-22T13:02:00.001-07:002016-08-09T09:09:37.310-07:00Raising Money through Crowd funding<br />
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<span style="background-color: white;">For as long as there has been money in
South Africa, people have been trying to get their hands on it for one reason
or another.</span><span style="background-color: white;"> </span><span style="background-color: white;">For some it is just a matter
of personal gain, for others it is to keep a roof over their families heads and
food on the table.</span><span style="background-color: white;"> </span><span style="background-color: white;">But for some, it has
been to create a <a href="http://www.ukbusinessplanning.co.uk/">business plan</a> and start a business or create a work of art, or other goal geared towards
contributing to society as a whole.</span></div>
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<span lang="EN-US">There are hundreds of ways to raise money
and most of us have been involved in some form of it or another all of our
lives. Starting with the child on the
corner selling lemonade to passerby's, to community bake sales, car washing
services, street performing and the like.
All of these activities involve raising money. The problem with them is that they normally
only raise a small amount of money at a time and require a great deal of effort
on the part of the people working them.<o:p></o:p></span></div>
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<span lang="EN-US">Crowd funding is a new way of raising money
in South Africa. Think of crowd funding
as a community bake sale, except it's happening simultaneously all over the
world. All of those little sums of money
the bake sale generates add up to a large amount that can be used to fund any
type of business or project. The vehicle
used to carry on this worldwide bake sale is the internet.<o:p></o:p></span></div>
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<span lang="EN-US">Raising money through the internet is
nothing new either. However it has in
the past been the unfortunate victim of scam artists trying to fool people into
sending them money. Because of this
raising money through the internet was given a bad rap. Now though through the use of professional
crowdfunding sites it is possible to legitimately raise large sums of money
over the internet. These professional sites
make raising money easier because they have reputations and standards to meet
to comply with government regulations so people are more willing to trust them.<o:p></o:p></span></div>
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<span lang="EN-US">Raising money through crowd funding is used
mostly by business start-up entrepeneurs as well as artists, musicians and film
makers. These are people who do not
qualify for financing either through angel investors or venture capitalists but
still have a great idea or project that they would like to bring to the
public. So instead of going out and
washing cars or having a bake sale, they make a video explaining their project,
the benefits of it to society, why they can be trusted, and what their long
term goals are. This video is then
placed on these crowd funding websites where people can watch them, get more
information, and if they decide to they can invest in that project. These small investments from hundreds of
people add up to enough money to get the project off the ground.<o:p></o:p></span></div>
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<span lang="EN-US">Another means of raising money is using
your own network of people you know.
Start off with your friends and family.
Tell them about your project and that you are raising money to make it a
reality. This is the most common form of
crowd funding and has been around forever.
Then take your message to the people through social media and press
releases. Tell them about why your are
raising money and also why you have chosen crowd funding as your vehicle to
come up with the capital you need. Let
them know what the benefits to them will be for investing in you and build
their trust.<o:p></o:p></span></div>
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<span lang="EN-US">Raising money through <a href="http://www.startme.co.za/">crowdfunding</a> can
happen very quickly if your message is a strong one that motivates people. Or it can take some time to build up
momentum. The most important aspect of
raising money through crowd funding is you continue to spread your word on a
daily basis and be open and honest with the people you hope will invest in you.<o:p></o:p></span></div>
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-761740587133884272012-01-31T08:07:00.000-08:002014-05-07T08:24:14.935-07:00Consideration when investing in a businessAs an <a href="http://cabancapital.co.uk/">investor </a>hoping to get involved in a new business opportunity or simply invest in a viable <a href="http://www.businessplanwhiz.co.za/">business plan</a> it is crucial that you do your due diligence on the opportunity that you are investing in. But this is of course not the only consideration. Understanding the industry, the market and of course the people in the new business and ensuring that you feel comfortable with the elements are also of the utmost importance. Here we look at a few additional steps to take and issues to consider before you make the important investment choice.<br />
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Research: Whether you are a beginner or have an experience in making business investments, a thorough research is very important and the foremost prerequisite. It could get real frustrating at times for you to select the right opportunity out of those hundreds other business opportunities that may not be legitimate. There can be different kinds of franchisee businesses that may look worth investing, but may not be advisable. It is always very important not to skip any detail while doing a research on the possible investment opportunities. <br />
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Background Verification: If you decide to contact a company with an interest for investing into their business, you should not miss out any important questions that could be relevant to the business. For example, knowing the possible span of the contract period and exact figures that you need to invest for a particular business are helpful for finding the suitable business investment opportunity. You must also check different business bureau websites that provide information about the legitimacy of companies and businesses you might be targeting. It would be really helpful to know if a particular business or company has any legal complaints and lawsuits against it. <br />
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Reference Checking: Before taking any decisions on business investments, you should always refer to certain reliable sources, such as taking advice from people you can trust, consulting family members who are into a business, or other successful investors who have experienced into franchisee business. <br />
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Hall of Commerce: To invest in the local market, a wiser way to proceed would be to consult the local hall of commerce, which is present in almost every city. You get an opportunity to consult with other successful businessmen and business organizations as to how to start and grow a new business and to learn investment tactics. Moreover, local businesses or groups watch out for interested investors to help them expand their existing businesses.<br />
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Investment Advisor: If you are a beginner into this field, choosing the right business investment opportunity can get real risky if you do not have an expert investment manager or advisor. An investment manager can give expert opinion about specific business investments based on your requirements and affordability. Knowledge about business investments is a significant factor in choosing the right opportunity. It is therefore advisable to always hire an investment manager before joining the bandwagon of new business investors.<br />
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An ideal business investment opportunity can also be helpful to enter the global market. If you are already an investment expert and can bend your priorities well to match the international market, you can also consider investing on some international businesses. You can find information about investing into global markets from various Internet sources.<br />
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As always, the list is of course almost never conclusive. Yes the owner of the business, his <a href="https://www.businessplanwhiz.com/">business plan</a> and track record would give you plenty of indications on weather his business is for you but in addition to that trust your gut, ask a trusted friend or colleague for their opinion and make sure you have a strong affiliation with the business that you are getting involved with.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-60093488279096584502011-11-01T15:19:00.000-07:002016-09-11T07:38:32.859-07:00Invest in a Business You Can Influence<br />
One of the main reasons an entrepreneur will be approaching you with their <a href="http://www.ukbusinessplanning.co.uk/">business plan</a> and off you a stake in the business is to get you involved. This is especially true for early stage businesses and<a href="http://www.enterpriseforum.co.za/"> new entrepreneurs</a>. These businesses want you to get involved. They are looking for your experience and contacts as well as your investment into the business. <a href="http://www.caban-uk.co.uk/">Angel investment</a> is much less about investing your money and waiting for a high return and much more about getting involved.<br />
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Yes of course no entrepreneur wants you to interfere so drastically that they feel both intimidated and out of place in the own start-up. But getting involved with he right attitude can benefit both the business and of course you with your investment.<br />
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Investing in a company as an angel is an intimate affair. You commit only after a thorough due diligence process evaluating the potential success of the idea. You evaluate the talent and drive of the founding team. It’s about people, and the company comes to hold a special place in your heart.<br />
Traditional investments like stocks? They’re just a ticker symbol in a chart, affected by powers far-removed from your own.<br />
Right? Isn’t one of the best things about angel investing that you get to participate in how well your investment turns out?<br />
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It’s Not Just Your Money They Need. <br />
My ideal vision of an angel deal incorporates something much more than money. Forget about being a “passive investor”. That’s just as boring as a mutual fund.<br />
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When you put your money into a company, hopefully it’s partly because you feel it can benefit from your experiences in business. So you’ve grown 2 online companies through strong search marketing and sold them? That’s awesome, and you should be finding companies that can benefit from that experience.<br />
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Of course you’re not necessarily going to come in and be the CMO. But the 1 email per week you can give your entrepreneur could be worth R1 000,000 to the bottom line. The one answer per week that you can provide about a tough marketing decision could make all the difference in the world.<br />
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Go With What You Know <br />
It’s only natural for people to be drawn to things they understand. In angel investing, that means you’ll likely gravitate towards companies that mirror your own past experiences.<br />
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That’s a good thing! Take your money and your advice to places where it’s mostly likely to be useful. I’m not about to invest in a pharmaceutical manufacturer, but I’ll jump all over sleepapnea.com.<br />
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Remember – You Can Contribute <br />
The “passive” angel investor annoys me, especially if he/she bemoans the poor performance of their investments. If it’s your Energizer stock, that’s one thing. If it’s the R50,000 you put in 2 angel deals in 2008, well do something about it. I’m sure your entrepreneurs are open to ideas, help, connections, and insights. Getting your hands dirty an only be a good thing.<br />
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Make sure that you get involved with the type of personality that will enjoy getting you involved. someone who is not protective over their own <a href="http://www.ukbusinessplanning.co.uk/">business plan</a> to such a level that they are not open to learning and benefiting from others ideas.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-86561597455659465742011-10-19T04:25:00.000-07:002014-05-07T08:25:37.918-07:00Second Round Business Funding: What You Should Know<br />
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When most
people think <a href="http://www.businessplanwhiz.com/">business plan</a> and <a href="http://cabancapital.co.uk/">business funding</a>, they think start ups. New businesses, with no
track record, looking for seed or <a href="http://www.investorsnetwork.co.za/">start up capital</a>.</div>
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<span lang="EN-ZA">However,
while that may be the most popular notion, when it comes to business funding,
it’s certainly not the first time that companies need to <a href="http://www.sabusinessplans.co.za/">find funding</a>!<o:p></o:p></span></div>
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<span lang="EN-ZA">In this
article, we look at second round business funding: funding to help you grow,
expand, and improve your existing business. <o:p></o:p></span></div>
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<b><span lang="EN-ZA">When Is Second Round Business Funding
Necessary?<o:p></o:p></span></b></div>
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<span lang="EN-ZA">The first
thing you need to find out about second round business funding is when you
might need it. <o:p></o:p></span></div>
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<span lang="EN-ZA">Traditionally,
companies apply for second round business funding when they have already
established their business, are successful, and are looking to take their
company to the next level. <o:p></o:p></span></div>
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<span lang="EN-ZA">Usually,
that means expanding into new markets, investing in tools or equipment that
allows them to expand capacity, or some other expansion designed to increase
revenues and profits. <o:p></o:p></span></div>
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<span lang="EN-ZA">Second round
business funding is NOT something you apply for because you’ve spend your first
capital investment, without achieving your start up goals! If you try to apply
for funding just because you’ve run out of money, you’re likely to find a lot
of doors closing in your face, very quickly!<o:p></o:p></span></div>
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<b><span lang="EN-ZA">Who Can You Approach for Second Round Business
Funding?<o:p></o:p></span></b></div>
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trickier question. In some cases, particularly if you have received business
finance from a bank or traditional lender, you might be able to approach your
loan account manager for second round funding, however, it may be tough to
convince them, and you would need collateral to secure the loan. <o:p></o:p></span></div>
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<span lang="EN-ZA">In many
cases, businesses looking for second round funding turn to venture capitalists
or angel investors, who are generally more willing to take an equity stake in
an up and coming company, and are less risk averse. <o:p></o:p></span></div>
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<span lang="EN-ZA">Sometimes,
you may even find companies in your industry, who are willing to take a stake
in your company, particularly if you offer complimentary products or services. <o:p></o:p></span></div>
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<b><span lang="EN-ZA">How Do You Apply for Second Round Funding?<o:p></o:p></span></b></div>
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<span lang="EN-ZA">Applying
for <a href="http://cabancapital.co.uk/">second round business funding</a> is a lot like applying for the first loan or
investment you got. You’ll still need a business plan, you’ll still need to
pitch, and there’s still a lot of red tape involved. <o:p></o:p></span></div>
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<span lang="EN-ZA">This time
around, however, instead of selling your idea, you’ll be selling results. You
might include ideas – in the form of expansion plans and new markets or
products, but investors considering giving you second round business funding
will want to know how your company has been doing so far. <o:p></o:p></span></div>
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<span lang="EN-ZA">If you can
prove that you’ve grown significantly, that your products and services are in
demand, and that your team works well together, then you’re far more likely to
get second round business funding. <o:p></o:p></span></div>
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<b><span lang="EN-ZA">The Upside of Second Round Business Funding<o:p></o:p></span></b></div>
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<span lang="EN-ZA">The good
news for business owners looking for second round business funding is that this
time around, you’ll be on a much better footing, when it comes to negotiations.
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<span lang="EN-ZA">Brand new
ideas, untested companies, and new entrepreneurs often have to give in more to
secure the first round funding they need to start their companies.
Entrepreneurs looking for second round business funding, who already have a
successful business that they want to grow, have more leverage at the
negotiation table – and probably more people willing to invest. <o:p></o:p></span></div>
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<span lang="EN-ZA">It’s not
unheard of for companies who self fund to successfully secure second round
business funding too, so if you’ve been working hard bootstrapping your
company, and it’s paid off, there’s every chance that the next growth phase of
your business could come from outside funding sources!<o:p></o:p></span></div>
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<span lang="EN-ZA">So if you
are looking for second round funding, start polishing up that business plan!
You’re going to need to prove just how great that idea turned out to be!<o:p></o:p></span></div>
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-74765279210212466802011-10-04T05:57:00.000-07:002011-10-04T05:57:33.651-07:00How to Scare Off Angel Investors<br />
There are countless articles out there about how to find angel investors, and how to turn <a href="http://www.investorsnetwork.co.za/">business angels</a> into the ticket your business idea needs into the big time. Have you ever considered, however, what scares business angels and angel investors away? <br />
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In this article, we look at sure-fire ways to scare business angels and angel investors away, so that you can avoid them when you are pitching. <br />
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<strong>1. No <a href="http://www.sabusinessplans.co.za/">Business Plan</a></strong><br />
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Again, this is an offshoot of our tendency not to take angel investors seriously. We think of them as a friend, rather than a business partner and too many people make the mistake of giving them a half baked business plan, or none at all. <br />
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An angel investor may meet with you on the golf course rather than in a boardroom, but good business angels are also shrewd business people, and they will want to know that you have a <a href="http://www.businessplanwhiz.co.za/">solid business plan</a>. Make sure that yours is as good as you would offer a venture capitalist, and you should be fine. <br />
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Remember, it is better to be overly formal, and give your potential angel investor too much to work with, than it is to miss out on the deal of a lifetime because you did not bother!<br />
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<strong>2. Treat Them as Anything Other Than an Investor</strong><br />
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Too often, we think of angel investors as something other than a ‘real’ investor. We all seem to think that because it is a less intense relationship than you would have, with say, a bank, they are something other than a fully-fledged investor. <br />
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However, think of it this way. The money they are going to put into your business is real, so the investment is as real as any other is. If your relationship is casual, that is fine, but always remember that while it is okay to be friendly, you are still dealing with a bona fide investor in your company. <br />
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<strong>3. Overvaluing Your Business</strong><br />
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Often, you believe that you have a multi million-dollar idea. You decide to offer your potential angel investor twenty percent of your company, based on this future valuation of your business, and the deal falls through. <br />
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The reason is simple: while you see your business as having the potential to earn millions, your business angel is looking at what it is now – and probably thinks that something closer to fifty percent is fair compensation for risk. <br />
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No one wants to give away more of their business, but think of it this way: without your angel investor, you probably do not have a business, and while it hurts to sign away a sizeable chunk of that potential company, you have to consider that 100% of nothing is still nothing. Sometimes, you have to negotiate with what you have now, in order to secure the future. <br />
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<strong>4. No Exit Strategy</strong><br />
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We entrepreneurs tend to get caught up in the here and now. We are so excited about our idea, and the potential it has to change the world, that we forget that most business angels do not want to be involved with start-ups forever. <br />
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Most angel investors want a clear-cut, documented exit strategy in place, so that they know that in five or ten years, they will get their investment back, plus a tidy profit. <br />
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Consider whether you will list your business, sell it, whether management buyout is an option, or anything else, and make it clear to potential angel investors that you will be giving them a way out of the deal after a definite time period has elapsed. <br />
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<strong>Think About Their Fears</strong><br />
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Angel investors are a special breed. They often invest in companies that no one else would consider putting money into. They have an appetite for risk that makes them the perfect partner for start-ups, and they are usually the light at the end of a very long, very dark financing tunnel!<br />
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Make sure that you put yourself in their shoes before you pitch your idea, and identify any potential fears they have. Then do your best to allay those fears and you might just find that a business angel is your start-ups best chance at the big time after all. <br />
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-41512345737029576192011-09-26T08:41:00.000-07:002016-08-09T09:21:42.424-07:00Considering an Angel Investor? Read This First!If you have heard about business angels, and you are thinking that an angel investor sounds like just the ticket to take your business from idea to <a href="http://www.ukbusinessplanning.co.uk/">business plan</a> to reality. However, there are some cases where an <a href="http://www.caban.co.za/">angel investor</a> may not be the best thing for your business. Here are a few things you should consider before you jump right into a deal with the first business angel who says yes. <br />
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<b>Do You Really Need the Money?</b> The first question you need to ask yourself is whether or not you really need money from an angel investor. Most of us fall into the trap of becoming all starry eyed when a business angel offers us money, but unless you genuinely need the capital, it may be better for your business if you at least tried to go it alone, and bootstrap your company. Remember that most angel investors will want an equity stake in your business, and while that’s a good deal if you need to raise funds, and have no collateral, giving away chunks of your company for no good reason doesn’t make good business sense! <br />
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<b>Are You Being Used?</b> It may sound like something out of a mafia movie, but it is not unheard of for less than scrupulous business people to use small businesses to launder funds, or for other illegal purposes. Be very wary if any potential angel investor wants to invest cash in your business, or if they invest using a convoluted process that involves shell corporations or anything else that makes you suspicious. <br />
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Remember that if you are associated with an angel investor who turns out to be involved in dodgy dealings, you will automatically come under suspicion too, and it could potentially spell the end of your business, even if you are not guilty. Try to remember that due diligence works both ways and that while you are being evaluated and looked into by your potential angel investor, you should be doing the same with the potential investor. <b></b><br />
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<b>Are You Willing to Have Someone Looking Over Your Shoulder?</b> Ideally, from the entrepreneur’s perspective at least, the angel investor is someone who considers your idea, takes a small stake in your business, hands over funds, and turns up at quarterly shareholder meetings. However, in reality, there are plenty of angel investors who are much more hands on than that. <br />
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Many of them are established entrepreneurs and business people themselves, and that means that they generally have lots of experience and knowledge to share. While it can be great to have a seasoned veteran on your team, who takes and active role in your business, it can become a nightmare when you find yourselves clashing, or if you take on an angel investor who doesn’t know enough about business, but feels entitled to be involved in decisions because it’s their money you’re working with. This should not deter you from looking for an angel investor if you genuinely need financing, but you should make sure that you have all the details about involvement in day-to-day decision making or running your business ironed out, and on paper, and you should be fine. <br />
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<b>Angel Investors Are Great – Most of the Time</b> The truth is, in the vast majority of cases, angel investors ARE the answer to your prayers. But in a tiny minority of cases, they are not. As long as you are cautious, and not blinded by the possibility of getting the money you have been chasing for so long, you should be fine. Treat it as you would any other business deal, and funding from a business angel CAN be the best thing to happen to you. <div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-36486809824636837402011-06-07T04:33:00.000-07:002016-08-09T09:05:25.783-07:00Should You Pay To Find Angel Finance?<div class="MsoNormal">
If you've ever typed the words ‘<a href="http://www.caban.co.za/">angel finance</a>’ or ‘<a href="http://www.investorsnetwork.co.za/">angel investor</a>’ into your search engine with the intention of finding finance for your <a href="http://www.ukbusinessplanning.co.uk/">business plan</a>, then you've probably been bombarded with all sorts of websites that promise to find you an angel investor for your business. <span style="mso-spacerun: yes;"> </span>The question is, when those websites require you to pay a fee to join, is it worth it?</div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">The answer is not as simple as it seems, and it really depends on the website in question, and what you are looking to gain from signing up. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Why Sites Charge Membership Fees<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">The first thing you need to consider, when you are looking at a website that charges a membership fee to join, is why they are charging that fee. Is making money off your membership the primary goal, or are they charging a fee to ensure that the people who sign up are serious about business, and will be valuable contributors?<span style="mso-spacerun: yes;"> </span>It’s a sad fact that there are spammers out there who prey on this type of site, and sometimes, charging a small fee can act as a deterrent. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Often, the sites that are basing membership fees on this reason will have a small fee only, and it might be a one off registration fee, rather than a membership fee that is recurring. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">If the site is purely there to make money, then it probably won’t offer all that much in the way of information, but rather, will focus on having investors and entrepreneurs sign up to meet each other – something that you can do without paying for the service.<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What Sites Do For You<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Another thing you need to understand, when deciding whether to sign up for angel investor sites that charge a membership fee, is that your success is still based on the strength of your idea, and the market demand for your product or service. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Paying for membership to an angel investment network is not a guarantee that you will find an investor, it just gives you an easier platform on which to present your ideas to those investors. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">That platform, however, can be a valuable tool in your search for an angel investor, as it can give your business idea international exposure, and bring your idea to the attention of angel investors who might otherwise prefer to be anonymous – and notoriously hard to find!<span style="mso-spacerun: yes;"> </span>Yes, you can find them on your own, offline, but it can be a time consuming, laborious, and difficult task.<span style="mso-spacerun: yes;"> </span>Having everyone assembled in one location takes the hard work out of the equation. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Is It the Right Choice for You?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">As you can see, there are definite pros and cons to paying for angel investment site membership or advertising, and you will need to weigh those pros and cons based on your unique situation. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">If you have a solid business idea, that you are sure angel investors will be interested in, if you have a viable and well constructed business plan, and if you are looking for a fast, convenient way to present that idea to potential angel investors, then this could be a good idea. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">You will still need to evaluate each site on it’s merit, and make sure that you will indeed be getting the exposure that you are paying for, but on the whole, investment portals that charge a fee might not be a bad idea. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Think about it this way: the time, effort and cost involved in finding investors, contacting them, travelling to see them, and all of the other things that go along with looking for an investor ‘the old fashioned way’ are an investment in your business, right?<span style="mso-spacerun: yes;"> </span>The same can be said for advertising on the right investor portal. <o:p></o:p></span></div>
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-38476101403823598662011-05-19T05:23:00.000-07:002016-08-09T09:23:54.344-07:00Pitching to Angel Investors – What’s Important?<div class="MsoNormal">
If you are interested in <a href="http://www.caban-uk.co.uk/">getting funding from an angel investor</a>, chances are you have at least one or two people in mind already.<span style="mso-spacerun: yes;"> </span>The trouble is, while it’s easy to understand what you will need to <a href="http://www.ukbusinessplanning.co.uk/">pitch to a VC</a> or bank, it’s not always so simple to be sure of what angel investors are looking for in your <a href="http://www.ukbusinessplanning.co.uk/">business plan</a> or pitch.</div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Since, as the saying goes, forewarned is fore armed, we have decided to look at what private angel investors look for, so you can pitch accordingly. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Your Niche<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Often, angel investors are successful entrepreneurs, who have made their fortunes in a particular niche.<span style="mso-spacerun: yes;"> </span>It is not always strictly necessary that your business idea is in the same niche, it can help your case when pitching!<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Before you pitch to an angel investor, it is a good idea to do some research, and find out which industries they were or are involved in, and what fields they are interested in.<span style="mso-spacerun: yes;"> </span>If your potential business is one that is complementary to their existing businesses or companies, you may just find that you have an easier time pitching your ideas. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Enthusiasm!<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">There is a saying in the field of venture capital – that investors aren’t lending money to an idea, but to a person.<span style="mso-spacerun: yes;"> </span>That’s even more true when you’re pitching to angel investors. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">When you pitch to an angel investor, you will often have a one on one meeting, rather than a meeting with a board or group of people.<span style="mso-spacerun: yes;"> </span>Your enthusiasm for your business or idea will be even more obvious in that sort of setting, and it will be very easy for the business angel you’re approaching to tell whether or not you’re in love with your idea!<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Make sure your energy, excitement and passion for your idea shines through – it might even be more important than facts or figures!<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">A Solid History<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Another thing your potential angel funder will want to see is that you have a solid history – either in your field, or in business. Take some time to think about your CV, and what you’ve already achieved, as well as how that relates to the business you’re interested in. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Make sure that you don’t embellish your achievements though – it’s better to admit that you don’t have much experience if you don’t, than to try to lie about it. Remember that your relationship with an angel investor is largely based on trust, so start of on the right foot!<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">A Sound Business Plan<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Doing research on the business angel you’re approaching themselves, and ensuring that your passion for your project shines through is vitally important when approaching an angel investor, but it’s just as important to make sure that you have a business plan. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Angel investors are often more involved in the substance of the plan than the layout or format, but they’ll almost always want to see basic information about your business idea, how you plan to achieve your goals, and the financials that are involved. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Make sure that you arrive to any meeting with a potential investor with a comprehensive business plan, but try to keep it short and sweet. Your business angel can always ask for more information if he or she is interested, but you don’t want to bore them with too much information at first!<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Angel funding may not be easy to find, but the good news is that it’s often easier to obtain than many formal types of funding, particularly if you are a first time entrepreneur! Just remember that an angel investor is lending money to you, as much as they are lending money to your idea, and pitch accordingly. <o:p></o:p></span></div>
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-695347976578338502011-05-19T03:06:00.000-07:002016-08-09T09:06:46.246-07:00Finding An Angel Investor Is Not the End of the Search!<div class="MsoNormal">
With all the press that <a href="http://www.caban.co.za/">angel investors</a> are getting these days, many would be business owners and <a href="http://www.enterpriseforum.co.za/">entrepreneurs</a> with viable <a href="http://www.businessplanwhiz.com/">business plans</a>, probably think that <a href="http://www.caban.co.za/">finding an angel investor</a> is the answer to all of their prayers, and the end of their search for funding.</div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">While that may be true for a small number of entrepreneurs, the reality is that many entrepreneurs who receive angel funding still have to face traditional financiers and venture capitalists at some stage. In this article, we look at what angel investors do, and why you might still have to search for funding again in the future. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What Do Angel Investors Do?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">There are many different types of angel investor out there, and while some do offer full financing for the companies they back, the majority offer what is known as seed capital to start ups. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Seed capital is usually a small amount of capital, which gives an entrepreneur the funding they need to start their business, and get it off the ground. It’s often enough to get your business from an idea to the start of profitability, but in many cases, once you reach profitability, and you want to expand, you will need to seek additional capital.<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">That additional capital is often referred to as growth capital, or first round funding in the world of venture capital. It builds on the start you’ve made with angel funding, and it’s often as necessary as the capital you need to start your business. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What’s the Point?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">If you’re shocked to find that you might still need to look for traditional or other funding later on, and you thought that angel funding was going to solve all your problems, you’re probably wondering what the point is. Why bother to find angel funding if you’re only going to have to find more funding later on. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Well, the simple fact is that angel investors are often much more likely to finance new, untested businesses. They may also have a much higher risk appetite than traditional financiers, and they’re probably more willing to invest in your idea than anyone else is. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Angel investment is often the stepping stone you need to take your business from idea to working concept, and once you’ve proven that it’s a solid idea, and that it can make a profit (and you have the results to back up your claims), you and your business will be much more attractive to traditional financiers!<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What to Expect?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">When you work with an angel investor who is offering you seed capital, there are a few things you need to bear in mind. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">First, you need to realise that often, angel investors provide small amounts of funding. Since angel investors are often private individuals, and often someone you know, you probably can’t expect huge amounts of cash! Some of the biggest companies out there got their start thanks to angel investors, but they only received a few hundred dollars in some cases!<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Angel investors will usually also want to be involved in some way. Most will expect regular updates on your progress, and some will want a more hands on role, but nearly all angel investors will expect an equity stake in your company. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">What’s Next?<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">The goal with angel finance for start-ups is to give you just enough cash to turn your business idea into a profitable reality. Once you’ve done that, and have been running your company for a while, you will probably need to approach a financier with your business plan, and proof of your results. At that point, you might pay your angel investor back for their investment (plus interest or any other fees they may charge you) or they may decide to retain their stake in your business. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">However your angel investment deal is structured, however, and whatever you need to do later on in terms of funding, it’s important to remember that angel investment probably won’t be the last time you seek funding, so think of it as a stepping-stone, rather than a finite solution!<o:p></o:p></span></div>
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-88306391295342531112011-05-06T14:59:00.000-07:002011-05-06T14:59:05.513-07:00When Angel Investors Are a Bad Idea<!--StartFragment--> <br />
<div class="MsoNormal">To most <a href="http://www.enterpriseforum.co.za/">small business</a> owners with a viable <a href="http://www.businessplanwhiz.co.za/">business plan</a>, <a href="http://www.investorsnetwork.co.za/">angel investors</a> sound like the ideal, don’t they? After all, angel finance is the type that you usually don’t have to pay back (at least not immediately), and angel investors tend to have a higher risk appetite.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">However, there are certain things you should be wary of, when accepting angel funding, and in this article, we look at what they are.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;"><b>Angel Investors Who Want to be Hands On<o:p></o:p></b></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Under certain circumstances, an angel investor who takes an active role in mentoring you, as well as providing funding, can be a great thing. That is, if you’re receiving your angel funding from someone who has made a success as an entrepreneur themselves, and who knows the ropes, so to speak. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">However, there are angel investors out there who don’t know much about business at all, and if they decide to take a hands on role in your business, you should be cautious. Do you really want every business decision to be a battle between you and your investor? Be as careful when choosing an angel investor as you would any business partner, and you should be fine. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;"><b>Angel Investors Who Demand Too Big a Stake<o:p></o:p></b></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Most savvy would be entrepreneurs understand that the old saying ‘100% of nothing is still nothing’ holds true today, and that giving away equity in your business is often necessary, if you want to attract investors – angels or otherwise. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">However, you need to make sure that the deal is still worth your while and giving away more than half of your company to an angel investor should give you pause for thought. Remember, when your company is a success, you want to have control – after all, you put in the hard work! So be wary of business angels who require too large a stake in your company for their participation. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;"><b>Business Angels Who Can’t Afford to Invest<o:p></o:p></b></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Business angels take all forms, and while it’s true that you might find an angel investor who has been a successful entrepreneur, and has a large amount of money set aside for investments, there are also times when we have to weigh an investment offer from a friend or family member. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">It’s always tempting to take a potential angel investor up on their offer, but make sure that you evaluate their financial position carefully. If your angel funding comes from someone who cannot really afford to invest, and their situation changes, even a little bit, you may find that they start asking for their money back before you can afford it. That only makes everything a whole lot trickier for everyone involved, so make sure that you only take angel funding (and particularly large amounts of funding) from people who can honestly afford to back you. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;"><b>Business Angels with Dubious Businesses<o:p></o:p></b></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Many small business owners have found themselves faced with a dilemma: to take money to start their business from someone who’s businesses or income may not be completely legal. Remember, however, that if you’re giving that business angel a stake in your company, and they are ever investigated or tried for illegal activities, there’s every likelihood that you could lose your business. Make sure you only deal with angel investors whose businesses and financial dealings are above board, and you should be fine. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">As you can see, while every small business owner thinks every angel investor is the answer to their prayers, there are times when you should exercise caution. Don’t jump into the first funding opportunity that comes your way, no matter how attractive it may seem. Remember that when you choose angel funding for your business, both you and your potential investor need to evaluate each other.</span></div><!--EndFragment--><div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-83508035574546401922011-04-28T02:57:00.000-07:002016-08-09T09:26:06.654-07:00Where to Look For Angel Investors?<div class="MsoNormal">
If you are just itching to quit your day job, and <a href="http://saentrepreneurs.blogspot.com/">start that business </a>you have always wanted to own, then there is a good chance that you are looking for financing of some kind.<span style="mso-spacerun: yes;"> </span>Chances are, you have heard of <a href="http://www.caban-uk.co.uk/">angel investors</a>, and you would really like to find one who can help you to make your entrepreneurial dreams a reality.</div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">The first thing you need to understand is what an angel investor or business angel is. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Angel investors are typically wealthy or well off people, who usually made their own fortunes through entrepreneurial means.<span style="mso-spacerun: yes;"> </span>Their motivation for helping out promising new business owners is usually as much from the desire to see others succeed, as it is a desire to make a profit.<span style="mso-spacerun: yes;"> </span>This makes them less risk averse than some other types of financiers, and means that anyone with a good idea, and a burning desire to succeed, could access this type of finance. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">The primary criteria, when working with an angel investor, is not whether you have collateral with which to secure your loan, or whether you have a pristine credit record, it’s whether you have a great idea, that can become a great business.<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Now that we know what angel investors are, let us get into the topic of this article: where to find them. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">On the Internet<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Thanks to the internet, many people who are looking for an angel investor now have a resource, literally, at their fingertips.<span style="mso-spacerun: yes;"> </span>It is not only the paid sites that can help though.<span style="mso-spacerun: yes;"> </span>Networking sites like Linked In and others can also get you connected with angel investors, or you could even look on classified advertising sites, or start your own website to promote your idea!<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">People You Already Know<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Many major companies started out with angel investment from somebody that the founders already knew. <span style="mso-spacerun: yes;"> </span>Granted, these were usually very small loans, but just about everyone has at least one relative, friend, or acquaintance who is well off, and speaking to them about funding your business idea, while scary, may be your easiest route to angel investment. Some people even find angel investors working in (or running) the company that they are working for before they launch out on their own!<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Networking<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Real world networking, whether it is attending trade shows or industry events in the industry you are interested in working in, or whether it is joining the local chamber of commerce, puts you in contact with plenty of other entrepreneurs and business people.<span style="mso-spacerun: yes;"> </span>If your idea is good enough, and you present it to those people you meet through those events in the right way, you might just find an angel investor who is willing to get your business started. <o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Other Events<o:p></o:p></span></b></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">If you are looking for an angel investor, you need to understand that they can appear from just about anywhere, at any time.<span style="mso-spacerun: yes;"> </span>You might be playing a round of golf, when someone who might invest in your business starts talking to you.<span style="mso-spacerun: yes;"> </span>You might be at a dinner party with people you have only just met.<span style="mso-spacerun: yes;"> </span>The key is to be ready. <o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">If you are actively seeking a business angel to invest in your business, make sure you have an ‘elevator pitch’ (a short description of who you are, and what your idea is) ready at all times.<span style="mso-spacerun: yes;"> </span>That way, whether you meet a potential angel at lunch or at the Laundromat, you will always be ready to take advantage of the opportunity.<span style="mso-spacerun: yes;"> </span>Keep it subtle though – you want them to be blown away by your idea, not scared off by your approach!<o:p></o:p></span></div>
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<span lang="EN-ZA" style="mso-ansi-language: EN-ZA;">Finding an angel investor is hard.<span style="mso-spacerun: yes;"> </span>There is no doubt about it.<span style="mso-spacerun: yes;"> </span>But the truth is, finding any sort of business funding is no picnic, and it can be done, if you have a great idea, and you stick to it. <o:p></o:p></span></div>
<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-65524839848704638152011-03-24T08:36:00.000-07:002011-03-24T08:36:54.381-07:00How I raised angel finance: EPISODE 1<div class="separator" style="clear: both; text-align: center;"></div>Finding a business angel to invest in <a href="http://www.enterpriseforum.co.za/">your business</a> will often be a time intensive process with much preparation by you as the entrepreneur and due diligence by the <a href="http://www.investorsnetwork.co.za/">business angel </a>to ensure that the <a href="http://www.sabusinessplans.co.za/">business plan </a>is really investable and of course that the current state of affairs is clearly understood. Today there are a number of industry bodies and networks available that will help you find the <a href="http://www.investorsnetwork.co.za/">small business finance</a> that you are looking for. Although banks have slowly started to lend again the fact is that they are mostly still fairly risk averse and as an entrepreneur you will often be left to find alternative sources for business funding to get your <a href="http://www.enterpriseforum.co.za/">business up and running</a> or fund the next stage of business growth.<br />
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So as and entrepreneur myself I realise that the how to of how to take care of activities such as funding a business angel is best heard from the horses mouth. In this first case study on how I found startup finance, we hear from entrepreneur Richard Palmer from <a href="http://www.d3o.com/">d3o lab</a>. Robert sourced his first round of angel finance almost a decade ago now and here shares his stories in hindsight.<br />
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What I did<br />
Examine the business' needs<br />
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"We developed our product, d3o, to a stage where it had great potential as a highly lucrative technology. However, we needed to get additional finance into the business to manufacture, sell and promote the product. In identifying our preferred funding route we thought carefully about our priorities, such as the amount of funding we required, any security we may need to provide and the amount of day-to-day involvement investors would require. Business angels tend not to require security and, having decided that we needed a substantial investment without having to cede too much day-to-day control, we decided that business angel funding was ideal for our business."<br />
Refine our business plan's presentation <br />
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"We had already prepared a business plan, but we refined it by including sections detailing how the business angel finance would develop the business and what involvement potential investors might have. We also spent time on the plan's presentation - ensuring it was focused and professional - to demonstrate our commitment. This stage was vital. A tailored business plan clarifies what the benefits of the investment are for both parties and specifically what the funds will be used for - and what they will achieve."<br />
Secure the funds<br />
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"Armed with our business plan, we contacted the British Business Angels Association who introduced us to several business angels. As a small but growing business our choice of angel was based largely on the sort of practical assistance they were offering. We then pitched our proposal to a shortlist of investors and tried to show them the benefits of their involvement - both for them and for us.<br />
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"One investor - David Richards - decided to invest after our first meeting with him. To secure the funds, we negotiated issues such as our respective responsibilities and growth targets. Finally, our legal adviser helped to negotiate the investment terms, such as our financial forecasts, which helped our investor complete his due diligence checks and agree the deal."<br />
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What I'd do differently<br />
View investment as an ongoing process<br />
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"When I was initially pitching for investment, I was trying too hard to make the business cash-positive in one single stage. Had I appreciated that the business would develop and grow in value so quickly, I would have outlined my longer-term investment requirements more strategically."<br />
Allocate more time to the project<br />
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"It takes a long time to secure any form of finance and it's no different in the case of business angel finance. If we had known at the start just how much time and effort it takes, I would have spent more time preparing an investment strategy at the outset."<br />
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Going forward it is of course important to realise that every financing round is different and of course every business angel is different. Still, its useful to consider the process that others have been through to prepare yourself and your <a href="http://www.businessplanwhiz.co.za/">business plan</a> for what is to come and what you are up against before you can start with the real work of running your business.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-31509527131664630972011-02-02T07:09:00.000-08:002016-08-09T09:25:22.448-07:00How to become an angel investorAlthough very popular and commonly used in countries such as the US and UK <a href="http://www.caban-uk.co.uk/">angel investors</a> are less well known in South Africa. An angel investor is normally a high net worth individual who chooses to get involved in the funding of new or growing businesses. These angel do not only bring with them much needed financial resources but also knowledge, contacts and experience that can be of huge benefit to the entrepreneur. The idea from the angel investors point of view is obviously to find a promising <a href="http://www.ukbusinessplanning.co.uk/">business plan service</a> or venture, invest capital, resources and time into the business and sell his/her stake in the business once that stake is worth much more. So the investors automatically has a real vested interest in the business being a success.<br />
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So why would you want to become an angel investor and how do you go about it?<br />
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Well first of all you can easily join a local <a href="http://www.investorsnetwork.co.za/">Investors Network</a> where investors and entrepreneurs are matched up. A sort of dating agency if you like for angel investors and entrepreneurs.<br />
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The reasons why many wealthy individuals want to become angel investors vary considerably. Some people seek a means to employ themselves, while others want to create jobs for their families and their future generations. Some really enjoy helping other start-ups succeed, while others simply have a hedonistic approach to investment, taking pleasure in risk-taking in a company’s success. In addition, there are those who are only interested on the economic gain and rate of return on an investment. Regardless of the reason, many angels share a few things in common:<br />
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1. Their average investment is anywhere between R50K to R500K,<br />
2. They tend to invest in smaller amounts (ideal for early-stage development) in a number of deals so that they can have a diversified portfolio,<br />
3. Even though profitability is their primary incentive, angel investors have local investments that promote community development and job growth.<br />
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To become an angel investor takes more than just personal wealth for a desired investment. According to Howard H. Stevenson, Sarofirm-Rock Professor of Business Administration at Harvard Business School, “reading business plans, studying in business school at angel seminars, and learning an industry by working in it” are ways that “one can develop expertise that will promote success in investing.” For both the entrepreneur and angel investor, Stevenson claims that “there is nothing like doing it,” referring to working and having experience in a given field.<br />
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In addition to having experience, angel investors should also define their personal and financial goals, and invest with those who have a solid track record when assessing any potential business opportunities.<br />
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1. Personal and financial goals- Angel investors must share the same goals as the entrepreneur in order to avoid some unpleasant, long-term surprises. These include everything from overall company prospective, strategic sales, salary distribution, exit strategies, etc. It is crucial to identify and see eye-to-eye with all of the underlying goals of the entrepreneur before making any financial commitment.<br />
2. Experience- Lots of angel investors were once entrepreneurs, and according to Lon McGowan, founder and CEO of iClick, “have been involved in many successful companies of their own.” Therefore, they not only have the financial means to invest in young companies, but they also have valuable industry and marketing experience to support other young, hopeful companies, making them excellent advisors and mentors.<br />
3. Capability- The most successful investments were made by entrepreneurs with triumphant experiences; therefore, an investor’s track record is the single greatest component that may be indicative of one’s overall potential.<br />
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William Sahlman and Howard Stevenson, from Harvard Business School, have proposed a basic framework for each investment opportunity/entrepreneurial evaluation as a three-sided model in which four vital components are organized and well-interconnected:<br />
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1. people,<br />
2. context,<br />
3. business opportunity,<br />
4. a deal<br />
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Not only is each individual component crucial for a successful investment, but the way they interact is also just as significant. A high-potential business opportunity occurs when there is the right arrangement or combination of each element, whereas poorly arranged/combined elements or lack of one or more of these essential components will lead to failure. The Harvard Framework is as follows:<br />
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successful-business-investment-opportunity<br />
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PEOPLE- refer to any significant stakeholders of the company, including the entrepreneur, team members, investors, advisors, etc.<br />
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THE POTENTIAL BUSINESS OPPORTUNITY- refers to the business proposal/plan, the consumer, the size of the business, etc.<br />
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CONTEXT- refers to the external factors that can influence the success of a business, including industry trends, the state of the economy, consumer supply and demand, technology development, etc.<br />
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DEAL- refers to the contract between an entrepreneur and an angel investor, including the terms, agreement and pricing.<br />
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There are five requirements that Micah Baldwin, an angel investor who sold his SEO consulting company, looks for in every business opportunity:<br />
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1. A leader/CEO- this individual should be competent in operating a business and dealing with the various challenges of their company. They should be trustworthy and exude confidence to those who follow them.<br />
2. A real revenue path/exit strategy- an investor should envision the marketing success, outlook and expectations of the business.<br />
3. Active involvement- every angel should be actively involved in their business venture. They can support the company by mentoring, giving advice, and even work behind the scenes.<br />
4. Avoiding convertible debt- this is a no-win situation because when an investor makes money, there is very little interest; however, when the company fails, their stock is of insignificant value.<br />
5. The desire to invest with other “quality” investors- often times, when an investor approaches every business opportunity with this method in mind, more than likely, others should heed their strategy. <br />
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So if this sounds like something you would like to get involved with why not become part of an <a href="http://www.investorsnetwork.co.za/">Investors Network</a> today and/or go to the next networking event organised. Who knows you may just find the perfect <a href="http://www.sabusinessplans.co.za/">business plan</a> to invest in.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-68880223214931590352010-12-17T14:53:00.000-08:002016-08-09T09:04:33.153-07:00Venture Capital or Angel Finance?Many entrepreneurs who have successfully raised <a href="http://www.caban.co.za/">business finance</a> for their <a href="http://www.ukbusinessplanning.co.uk/">business plan</a> will tell you very quickly whether they prefer <a href="http://www.cabancapital.co.uk/">Venture Capital</a> or <a href="http://www.caban.co.uk/">Angel Investment</a>. Both of course have their benefits and drawbacks and in may ways it just depends on what you are looking for. Scott Rafer (former CEO of <a href="http://www.mybloglog.com/">MyBlogLog</a>), talks about 5 reasons why getting angel investing is better than VC money:<br />
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1) Focus. “Angels can concentrate on the individual strategy of your company, rather than the larger portfolio management strategy a VC must bear in mind.”<br />
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2) Deal Terms. Angels generally don’t demand as much in liquidation preferences and other deal terms.<br />
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3) Future Funding Rounds. You will generally have more control over future negotiations in getting additional funding.<br />
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4) Transactional Control. “You won’t have to seek permission from investors who aren’t on your board or worry about what a VC needs to have happen vis á vis managing his limited partners… Angels have no LPs, so their agendas tend to be far more transparent.”<br />
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5) Exit. “Angels aren’t compensated in ratios. Angels get 100 percent of the profit they generate with their investment in your company. A VC only gets a fraction of the ‘carry’ generated on your deal. This is one reason a VC might be motivated to urge you to sell bigger.”<br />
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Rob Conway, a well known “super angel”, follows up with 3 more reasons why Angel money is more attractive than VC money.<br />
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1) The due diligence process will be less rigorous since angels are acting in their own interest and not investing OPM (other people’s money).<br />
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2) Angels are generally more vertical specialists than compared to VC’s.<br />
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3) “Angels have one-degree of separation from people in their professional network — not two, or three, or four. But because angels tend to be operational types, the business relationships they bring to the table are personal, not transactional. ”<br />
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Finally, Allan Leinwand, follows up with a counterpoint on why Entrepreneurs should prefer VC money over angel money. He claims VC’s will be better able to stick with the startup over the long term, if things don’t work out quickly. However, Tom Perkins, of Kleiner Perkins Caufield & Byers, says they put companies in the “ICU” if they are not performing well. They either see if they can get out of it or they shut off everything right away.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-15261797796035495052010-12-02T10:29:00.000-08:002016-08-09T09:07:52.065-07:00Angel Investors increasingly focusing on Cape Town as Entrepreneurial HubBoth angel investors and <a href="http://www.caban.co.za/">venture capital</a> providers are increasingly open to <a href="http://www.ukbusinessplanning.co.uk/">business plan</a>s and business finance opportunities in Cape Town. The city is fast becoming the entrepreneurial hub of Southern Africa supported by Business Plan Software providers SA Start-up system, the <a href="http://www.siliconcape.com/">Silicon Cape</a> Initiative and the <a href="http://www.theinnovationhub.com/index_hub.cfm">University of Stellenbosch enterprise initiative</a>. Entrepreneurs are increasingly encouraged and supported to grow their ideas.<br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">Cape Town is fast becoming an important centre for the hosting of entrepreneurship events and could soon become the primary meeting place for entrepreneurs in the Southern Hemisphere, according to the Western Cape Investment and Trade Promotion Agency (Wesgro).</span></span><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">Over the past two weeks Cape Town has played host to the Entrepreneurs’ Organisation (EO) University Cape Town conference, the Endeavour Foundation conference, the Cape Town Entrepreneurship Week (CTEW) and the Business2Business Expo. Last week, the city also organised the Global Entrepreneurship Week from 15-19 November spanning 104 countries and including 10 million participants.</span></span><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">Wesgro CEO Nils Flaatten, who presented on Global Competitiveness – Accessing the global eco-system at the CTEW at the University of the Western Cape, said: “These great events show that the challenges and opportunities faced by entrepreneurs are finally beginning to get the attention it deserves.”</span></span><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">“The fact that a large percentage of all start-ups worldwide fail within the first year shows just how difficult it is for entrepreneurs to survive, and the state of the global economy is going to make success for entrepreneurs even more challenging,” Flaatten added.</span></span><br />
<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;"><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">Flaatten believes that in South Africa, a country that has 48.9 million people, with only five million tax payers, growing the number of entrepreneurs is essential to the financial success of the country.</span></span><br />
<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;"><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">Flaatten calculated that if South Africa could create 20,000 entrepreneurs who each created 50 jobs, the country would recover the million jobs it lost as a result of the global financial crisis.</span></span><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">Wesgro has found substantial opportunities for entrepreneur-to-entrepreneur business linkages in Africa, especially around food products, stationary and household goods.</span></span><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">“Capital in Europe, owned by entrepreneurs who typically run businesses that employ 300 to 500 people, is looking for a new home, because it cannot find the growth it needs in the Euro Zone. South African entrepreneurs need to seize this moment,” said Flaatten.</span></span><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">Cape Town is home to over 5,000 IT entrepreneurs who have successfully merged software development and telephony.</span></span><br />
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<span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-family: inherit;">As the official Investment and Trade Promotion Agency for the Western Cape, Wesgro has contributed to the development of the Western Cape economy since 1982.</span></span><div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-74301664912342020182010-10-05T08:22:00.000-07:002010-12-23T10:13:07.402-08:00Investment going toward cloud computing and business software<div style="color: #272727; font-family: 'Lucida Grande', Verdana, 'Lucida Sans Regular', 'Lucida Sans Unicode', Arial, sans-serif; font-size: 13px; line-height: 19px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 1em;">Cloud computing an specifically cloud software is an extremely hot commodity at the moment with plenty of Angel investment going to <b><a href="http://www.businessplanwhiz.co.za/">business plans</a></b> focussing on cloud technology. The use of cloud computing has spread extremely fast specifically due to the huge benefits it holds for clients using the new technology for <a href="http://sabusinessonline.blogspot.com/">online business development</a> especially. Companies around the globe including <a href="http://www.google.com/">Google</a>, <a href="http://www.microsoft.com/">Microsoft</a>, <a href="http://www.businessplanwhiz.com/">business plan software</a> providers and a host of others have all very quickly adopted cloud computing.</div><div style="color: #272727; font-family: 'Lucida Grande', Verdana, 'Lucida Sans Regular', 'Lucida Sans Unicode', Arial, sans-serif; font-size: 13px; line-height: 19px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 1em;">In the last weeks, Internet based physician SaaS purveyor <a href="http://carecloud.com/" style="color: #009f00; font-weight: bold; text-decoration: none;">CareCloud <img class="snap_preview_icon" id="snap_com_shot_link_icon" src="http://i.ixnp.com/images/v6.47/t.gif" style="background-color: transparent; background-image: url(http://i.ixnp.com/images/v6.47/theme/silver/palette.gif); background-position: -1128px 0px; background-repeat: no-repeat no-repeat; border-bottom-width: 0px; border-color: initial; border-color: initial; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-style: initial; border-style: initial; border-top-width: 0px; display: inline; float: none; font-family: 'trebuchet ms', arial, helvetica, sans-serif; font-style: normal; font-weight: normal; height: 12px; left: auto; line-height: normal; margin-bottom: 0px !important; margin-left: 0px !important; margin-right: 0px !important; margin-top: 0px !important; max-height: 2000px; max-width: 2000px; min-height: 0px; min-width: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 1px; position: static; text-decoration: none; top: auto; vertical-align: top; visibility: visible; width: 14px;" /></a>announces today a $5 million round of funding coming after a <a href="http://techcrunch.com/2010/01/19/carecloud-funding/" style="color: #009f00; font-weight: bold; text-decoration: none;">modest $2.3 round </a>in January of this year.</div><div style="color: #272727; font-family: 'Lucida Grande', Verdana, 'Lucida Sans Regular', 'Lucida Sans Unicode', Arial, sans-serif; font-size: 13px; line-height: 19px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 1em;">Says CareCloud President and CEO <a href="http://www.crunchbase.com/person/albert-santalo" style="color: #009f00; font-weight: bold; text-decoration: none;">Albert Santalo<img class="snap_preview_icon" id="snap_com_shot_link_icon" src="http://i.ixnp.com/images/v6.47/t.gif" style="background-color: transparent; background-image: url(http://i.ixnp.com/images/v6.47/theme/silver/palette.gif); background-position: -1128px 0px; background-repeat: no-repeat no-repeat; border-bottom-width: 0px; border-color: initial; border-color: initial; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-style: initial; border-style: initial; border-top-width: 0px; display: inline; float: none; font-family: 'trebuchet ms', arial, helvetica, sans-serif; font-style: normal; font-weight: normal; height: 12px; left: auto; line-height: normal; margin-bottom: 0px !important; margin-left: 0px !important; margin-right: 0px !important; margin-top: 0px !important; max-height: 2000px; max-width: 2000px; min-height: 0px; min-width: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 1px; position: static; text-decoration: none; top: auto; vertical-align: top; visibility: visible; width: 14px;" /></a>, <em>“We are delighted with the outpouring of support from our investors. They share our passion and vision to revolutionize the healthcare experience with our digital ecosystem.”</em></div><div style="color: #272727; font-family: 'Lucida Grande', Verdana, 'Lucida Sans Regular', 'Lucida Sans Unicode', Arial, sans-serif; font-size: 13px; line-height: 19px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 1em;">A cloud-based app suite, <a href="http://carecloud.com/" style="color: #009f00; font-weight: bold; text-decoration: none;">CareCloud<img class="snap_preview_icon" id="snap_com_shot_link_icon" src="http://i.ixnp.com/images/v6.47/t.gif" style="background-color: transparent; background-image: url(http://i.ixnp.com/images/v6.47/theme/silver/palette.gif); background-position: -1128px 0px; background-repeat: no-repeat no-repeat; border-bottom-width: 0px; border-color: initial; border-color: initial; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-style: initial; border-style: initial; border-top-width: 0px; display: inline; float: none; font-family: 'trebuchet ms', arial, helvetica, sans-serif; font-style: normal; font-weight: normal; height: 12px; left: auto; line-height: normal; margin-bottom: 0px !important; margin-left: 0px !important; margin-right: 0px !important; margin-top: 0px !important; max-height: 2000px; max-width: 2000px; min-height: 0px; min-width: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 1px; position: static; text-decoration: none; top: auto; vertical-align: top; visibility: visible; width: 14px;" /></a> attempts to modernize the process of being a healthcare provider; physicians can use CareCloud’s web-based apps to streamline the managing of their businesses as well as collaborate with other doctors in the CareCloud’s healthcare provider social network.</div><div style="color: #272727; font-family: 'Lucida Grande', Verdana, 'Lucida Sans Regular', 'Lucida Sans Unicode', Arial, sans-serif; font-size: 13px; line-height: 19px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 1em;">This most recent round of CareCloud financing is notable because it is entirely from angel investors, with no participation from traditional VCs. Says CareCloud Director of Marketing Mike Cuesta, <em>“A lot of the investors are new, but in terms of the names, we decided not to mention anyone in specific as there really isn’t anyone who is a ‘celebrity angel’, per se.”</em></div><div style="color: #272727; font-family: 'Lucida Grande', Verdana, 'Lucida Sans Regular', 'Lucida Sans Unicode', Arial, sans-serif; font-size: 13px; line-height: 19px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 1em;">According to Santalo, CareCloud plans on using the money to bolster software development and infrastructure to manage the “explosive growth” the service has had since their last series of funding and product launch in March. We've seen plenty of <a href="http://www.sabusinessplans.co.za/">business plan</a> funding go to cloud computing in recent months.</div><div style="color: #272727; font-family: 'Lucida Grande', Verdana, 'Lucida Sans Regular', 'Lucida Sans Unicode', Arial, sans-serif; font-size: 13px; line-height: 19px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 1em;"><span class="Apple-style-span" style="color: black;"><b>With internet infrastructures fast becoming very accessible, reliable, affordable and widely available with high connection speeds the sky really is the limit in terms of where this will go.</b></span></div><div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-868217292610372552010-09-15T07:57:00.000-07:002010-10-05T08:28:00.548-07:00Business angels invest R5 mil software firmAngel investment is allive and well as evident from the recent R5 mil investment into <a href="http://www.businessplanwhiz.co.za/">small business software</a> provider, focussing specifically on internet telephony software for small businesses.<br />
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A Ireland-based technology firm that has developed breakthrough internet telephony software for small businesses and which has won key business from Intel has raised R5 mil through their <a href="http://www.businessplanwhiz.com/">business plan</a> from the Business Angel Partnership.<br />
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Emutex, which is based in Raheen, Ireland, will use the investment to sustain development of its phone technology for small firms as well as support high-skilled employment in Ireland in the longer term.<br />
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Emutex’s phone solutions enable small businesses to seamlessly connect their office phones to the outside world using their broadband connection.<br />
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This enables businesses to significantly reduce recurring line rental and call charges while availing of corporate phone system features such as automated attendants, conferencing, recording and voicemail by email.<br />
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In October 2007, John Twomey and Mark Burkley, former senior engineers in Intel, paired together to form Emutex. Their vision was to form a software engineering company that designs and develops software solutions tailored to meet the needs of clients requiring electronic telecommunication, telemetry and IT products.<br />
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In December 2009, Tony Treacy, John Ryan through Axiom and Enterprise Ireland invested significant funds into the company to grow both its services and product businesses. The investments have since triggered significant growth and the team now look forward to challenging and exciting years as it strives to become a world leading software engineering solutions provider.<br />
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Enterprise Ireland’s Class of 2009 HPSU Showcase participant<br />
Emutex recently participated in Enterprise Ireland’s Class of 2009 HPSU Showcase having graduated from the Enterprise Acceleration Centre (EAC) based in Ireland.<br />
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“This investment came at a crucial time in the development of Emutex and our IP PBX product range,” said Twomey, managing director of Emutex.<br />
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“As a result of the investment we’ve accelerated the development of our intellectual property and products, namely the VMX - a modern IP PBX software system - which we launched in Ireland in August and will soon launch in the UK.<br />
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“The investment also enabled us to grow our successful services business and deliver complex embedded software solutions to high-tech clients including Avocent, ResourceKraft, Cloudium Systems and, more recently, Intel Corporation.”<br />
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He went on to say: “The investment has triggered significant growth and we can now look forward to challenging and exciting years ahead as we strive to become a world leading software engineering solutions provider.”<br />
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The investment was made possible by the Business Angel Partnership (BAP), who specialises in matching potential investors with High-growth Potential Start-Ups (HPSUs).<br />
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Aidan O’Driscoll, of the Business Angel Partnership in the Mid-West commented on the investment: “Finding the right investor match for a company can be a long and frustrating time for a start-up.<br />
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“With Emutex, the hard work has paid off and the investment has provided them with a platform to execute their longer term growth plans as well as the development of their phone solutions products and subcontract embedded software services.”<br />
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CorkBIC manages The Business Angel Partnership (BAP) in the south and mid-west region - a joint initiative between Enterprise Ireland, InterTrade Ireland and the Irish Business Innovation Centres (BICs).<br />
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The BAP Operates on a regional basis, providing a matching service for private investors (Business Angels) and pre-screened investment opportunities in start-up, early stage and developing businesses.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-49785092051663453312010-02-19T12:00:00.000-08:002010-02-19T12:00:58.940-08:00Become a Business Angel Benefit from Supporting a South African Entrepreneur“In the current economic climate, there has been a significant increase in demand from entrepreneurs with viable <a href="http://www.sabusinessplans.co.za/">business plans</a>, seeking access to alternative sources of investment,” said Ben Botes, who is co-founder at the<a href="http://www.investorsnetwork.co.za/"> South African Entrepreneurs and investors network</a>. <br />
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It's crucial that we attract more business angels to nurture the innovative enterprises of tomorrow and to assist in maintaining the future competitiveness of South Africa's economy.” <br />
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Potential “business angels” and their key advisers will be invited to hear more about the importance of “angel investing” as well as the potential returns and tax breaks they can expect from such activities. <br />
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The event, on April, is being managed by <a href="http://www.investorsnetwork.co.za/">Investors Network</a> as part of a campaign coordinated by the South African Business Angels Association. <br />
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We are excited to be promoting this activity in Gauteng and hope that it will stimulate some interesting investment activity,” said Jody Friend, CEO of a local business support initiative. <br />
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Investors Network will soon be announcing the opening of a facility where entrepreneurs and business advisers can hold confidential meetings and take home a DVD of the entire proceedings to protect their intellectual property.<br />
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The organisation was created in support of the various business owners in South Africa who find it difficult to arrange funding for their ventures, specifically as banks today are much more risk averse as they may have been two or three years ago.<br />
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Angel investors have made a significant contribution to the amount of entrepreneurs launching their businesses in the last few years. And it’s not only the Business angels who benefit. "Entrepreneurs benefit in a big way, they not only gain the funding which they were obviously looking to acquire but crucially also get experience and business contacts as part of the package, something that every entrepreneur both needs and deserves during the start-up process especially"<br />
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<a href="http://www.investorsnetwork.co.za/">Investors Network</a> holds regular business networking events in all South Africa's main centres.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-24832319373849308142010-02-12T02:28:00.000-08:002016-08-09T09:26:51.654-07:00What Do an Angel Investors Expect?I’m often asked what the expectations of <a href="http://www.caban.co.za/">angel investors</a> are when it comes to creating a relationship with a small business owner or entrepreneur. The entrepreneur is obviously interested in <a href="http://www.caban.co.za/">business financing</a>, potential contacts that the investor may bring as well as the valuable experience contributed by the angel investor. So what does the angel want in return? Well, there are almost as many answers to what angels expect as there are angels. Each has their own criteria and needs because they are individuals. Almost all want a board position and possibly a consulting role. All want good communication although for some that means quarterly reports, while for others that means weekly updates. Return objectives range from a projected internal rate of return of 30% over five years to sales projections of R20 million in the first five years to the potential return of five times investment in the first five years. Most are looking for anything from a five to 25 percent stake in the business. Some want securities - either common stock or preferred stock with certain rights and liquidation preferences over common stock. Some even ask for convertible debt, or redeemable preferred stock, which provides a clearer exit strategy for the investor, but also places the company at the risk of repaying the investment plus interest. Additionally, the repayment may imperil future financing since those sources will not likely want to use their investment to bail out prior investors.<br />
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Some angels ask for the right of first refusal to participate in the next round of financing. While this sounds eminently reasonable, some venture capitalists will want their own players only or certain investment minimums so this strategy may limit who future participants might be.<br />
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Future representation of the board of directors also needs to be clarified. When a new round of financing occurs, do they lose their board right? Or should that could be based on a percentage ownership - when their ownership level drops below a certain level, they no longer have board representation.<br />
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In order to protect their investment, angels often ask the business to agree to not take certain actions without the angel investors approval. These include selling all or substantially all of the company's assets, issuing additional stock to existing management, selling stock below prices paid by the investors or creating classes of stock with liquidation preferences or other rights senior to the angel's class of security. Angels also ask for price protection, that is anti-dilution provisions that will result in their receiving more stock should the business issue stock at a lower price than that paid by the angels.<br />
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To prepare to solicit an angel, several critical factors will aid in making the approach successful. First, assemble an advisory board that includes a securities accountant and an attorney. Two important functions of the board are to recommend angels to contact and to work with the management team to develop a business plan to present to the angel. The business plan itself should define the reason for financing, how the capital will be spent and the timetable for going public or seeking venture capital funding. It should include: an executive summary (description of the business, opportunity and strategy, target market, projections and competitive advantages); the industry, the company and its products and services (including entry and growth strategies); market research and analysis (customers, market size and trends, competition, estimated market share and sales); the economics of the business (including gross and operating margins and break-even analysis); marketing plan (overall strategy, pricing, advertising, promotion, and distribution); design and development plans (product/service improvement and new products/services); manufacturing and operations plans (geographic location, facilities and capacity improvements); management team (organization overview, biographies and compensation plans for key employees); financial plan (tax returns, profit and loss forecasts, pro forma cash flow analysis and balance sheets, 5-year projections); and proposed company offering (desired financing, securities offering, capitalization, timetable).<br />
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Most of all, take your time in forming a relationship with the bu<a href="http://www.investorsnetwork.co.za/">siness angel </a>you have in mind. You are going to be spending a number of years together at a critical time in your business' life. Take the time to assure yourself that this is a person who you are comfortable with through both the ups and downs the future will bring.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-86666238458161017142010-01-27T07:14:00.000-08:002010-01-27T07:14:00.385-08:00Angel Investors Filling Funding Gap<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmkl9LIf_sZKxZJJpkoy6kqhomq6Jm4Mpa8HduKyAzR-T5Yj7I9rcxgVO0ZMaPdsh7c6jJbwM7IvBSdZazowOdVMfL8DZurdtHZ5M5kN88Y_gxsJW2q-dD-ulV6soBugvpe2o35nu1D1JJ/s1600-h/angel.jpg" imageanchor="1" style="clear: right; cssfloat: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="133" mt="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmkl9LIf_sZKxZJJpkoy6kqhomq6Jm4Mpa8HduKyAzR-T5Yj7I9rcxgVO0ZMaPdsh7c6jJbwM7IvBSdZazowOdVMfL8DZurdtHZ5M5kN88Y_gxsJW2q-dD-ulV6soBugvpe2o35nu1D1JJ/s200/angel.jpg" width="200" /></a><br />
</div><a href="http://www.investorsnetwork.co.za/">ANGEL investors in South Africa</a> have been forced to fill the funding gap caused by banks' continuing resistance to lending to South African promising high-tech entreprepreneurs. <br />
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These Informal Investments, which supports young, potential high-growth firms with equity funding, has raised almost R1 million for a local start0-up recently. The Johannesburg-based technology firm produces advanced prosthetic upper body limbs for amputees. <br />
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The debt funding package is a first for the firm. Its chief executive, Jake Moolman, said the terms of the loan were "tough but fair". <br />
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A South African Co-investment Fund, which matches angel and private equity investment in South African firms, also contributed to the loan. <br />
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Waddell said banks were "nervous" about backing young, high-tech companies that export internationally. He said the banks' strict requirements, including personal guarantees from directors, would have proved too much of a "distraction" for management. Moolman said: "Investors were keen to do it. We raised the money very quickly. "After having spent time with a large number of banks that operate in South Africa, it became apparent that it was so much distraction for the management that it was easier to get the investors to do it, and they did."<br />
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Although Waddell said the investors would consider doing the same for other companies in its portfolio, it was not changing its policy as an equity investor. "We are not becoming a lending institution," he insisted.<br />
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Local entrepreneur, Josh Maloney said the lack of bank lending was threatening its growth plans. Bank loans are much harder to come by today than what it was two years ago. <br />
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"The banks are hesitant to provide funding because they're still risk-averse as a result of the financial crisis. This can hamper progress needlessly. It's time for the banks to step up and start supporting profitable fast-growth companies," he said.<br />
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Angel investment firms such have tended to provide loans as an interim "bridge" before an equity fundraising has been achieved. But the South African investor community has rejected the notion that private loans could replace bank lending.<br />
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Garry Olsom, an active angel investor said: "I wouldn't anticipate that this is a solution to the vast majority of SME funding requirements.”We still have to keep the pressure on banks and the government to do what I regard as normal lending."<br />
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Entrepreneurs are increasingly turning to sources of angel finance and venture capital to fund growth in their firms and the trend seems to be supported by the fact that business angels are also bringing more to the table in the form of experience, contacts and guidance. The banks do seem to unknowingly be supporting the trend and may not be able to reverse it in the future.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-10673080685438739912009-12-09T07:04:00.000-08:002009-12-09T07:04:18.858-08:00Angel Investors has Increasing importance for entrepreneursAs entrepreneurs around the globe look for alternative ways of finding new sources of finance to build the sectors that will drive their economic recovery, <a href="http://www.investorsnetwork.co.za/">Business Angels</a> will form a critical part of the the solution.<br />
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New research recently published by <a href="http://www.nesta.org.uk/">NESTA</a> (National Endowment for Science, Technology and the Arts) reports for the first time that Business Angels stand to make a substantial profit from investing in start-ups, with an average Internal Rate of Return (IRR) of 22 per cent over four years, compared with 27 per cent IRR in the US.<br />
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<a href="http://www.investorsnetwork.co.za/">Business Angels</a> - investors who put personal money directly into young unquoted companies - are a significant source of early stage finance. But despite their increasing importance, little is known about their outcomes and returns in the South Africa.<br />
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The report reviewed 1,080 investments. More than half were directed at very early stage, pre-revenue start-ups - the riskiest time of a company's life. This was reflected in the investment returns. Despite the fact that the majority of investments make a loss (56 per cent in this study), a substantial number (44 per cent in this study) lead to positive returns with 9 per cent generating more than 10 times the capital invested.<br />
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The report also suggests a number of strategic choices and practices that may lead to better investments outcomes such as investing in one's area of expertise, performing at least 20 hours of due diligence before investing and staying connected with the business, preferably at a board level.<br />
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Commenting on the research, NESTA's Chief Executive Jonathan Kestenbaum says "Angel investing can be a strong viable complement to traditional forms of investment which are not making anywhere close to 22 per cent returns. <br />
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The study finds that the EIS (Enterprise Investment Scheme) and other tax incentives contribute substantially to angel activity with 82 per cent of British angels using the EIS at least once; and the angels stating that about 24 per cent of their investments would not have been made without the tax incentives.<br />
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Anthony Clarke, Chairman of the BBAA says " This research has proven that Business Angels are now the key source of investment in early stage high risk companies. BBAA estimates that angels are currently investing c.R1billion p.a. in the country and it is important that further individuals should be encouraged to consider this asset class supported by targeted financial incentives. Angels bring not only their own finance, but business -building skills. South Africa needs to significantly increase the pool of business angels to invest in the successful innovators of tomorrow."<br />
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The report says that on average<a href="htttp://www.investorsnetwork.co.za"> Business Angels in South Africa</a> invest R42,000 and each investor makes around 6 investments. Investors typically reviewed 20 opportunities each and acquired 8 per cent of a company. Co-investments are seen as the preference for investing in start-ups with on average 5 investors co-investing in any one round. The figures generated by this study were comparable to the performance of the US Angel market relative to the size of the Angel community.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-60434883376648426512009-12-02T07:17:00.000-08:002009-12-02T07:18:42.093-08:00Angel Finance Initiative from the IDCGreat new for entrepreneurs and small business owners is the announcement that the Industrial Development Corporation or <a href="http://www.idc.co.za/">IDC</a> as its more commonly known as in South Africa is in the process of creating and a R250-millon <a href="http://www.investorsnetwork.co.za/">business finance resource</a>. The <a href="http://www.investorsnetwork.co.za/">venture capital fund</a> that will focus on providing start-up and even seed capital to companies or individuals seeking to commercialise or prove high-technology innovations is aimed at supporting innovation, entrepreneurship and other business initiatives in the country. The small business sector in South Africa is much relied on for creaing much needed job opportuinities for both educated and skilled and semi-skilled people in the country and the news will come as a welcome boost to those with ambitions to start and grow their business ideas.<br />
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CEO <b>Geoffrey Qhena</b> says that its board approved the funding, which is likely to be invested over the next five years, with full appreciation of the risks associated with such activities, and with a view to playing its role in addressing the current gap in this area of the South African finance structure.<br />
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At present, South Africa has a real dearth of financial institutions willing to take on venture-capital-type risks, with few, if any, so-called ‘angel investors’ in the marketplace. Indeed, those who have attempted to play such a role have reportedly found it tough going, with even IT billionaire <b>Mark Shuttleworth</b>’s HBD deciding to pursue more “mature opportunities” with its recently launched R150-million ‘HBD Fund2’. The first fund had focused on start-up-type opportunities.<br />
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Qhena reports that the capital approved is over and above the more than R400-million that the group has advanced on a wholesale basis for venture capital through other commercial-funding organisations. “We realise that we could lose the whole R250-million, but are optimistic that we will recoup the investment and even make a good return,” Qhena says.<br />
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Venture capital head <b>Hugo Swift</b> tells <i>Engi-neering News</i> that his unit – currently comprising four professionals, but which is likely to be extended to ten over the next few months – will hone in on technology-focused companies or individuals and will focus exclusively on extending start-up or seed funding, leaving expansionary-capital opportunities to other units within the IDC.<br />
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He expects that it will complete its first deal in the next few months and hopes that more than three deals will be clinched before the end of the group’s current financial year, which ends on March 31.<br />
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The majority of the unit’s efforts are likely to be directed towards telecoms and information technology innovations, such as software and ecommerce applications, but it will also be looking to support specialist high-technology products and services in the automotive, financial services, mining, chemicals and biotechnology areas.<br />
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The fund has a minimum invest- ment requirement of R1-million and has set its single-transaction ceiling at R30-million. But Swift says it is likely to cap its first-round funding allocation at about R15-million to create capacity for second-, or even third-round investments should an innovation or a company require such support.<br />
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The IDC aims to take significant minority stakes in the businesses or technologies being backed, but hopes to remains below the 50% holding level wherever possible.<br />
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A key value proposition of the new fund lies in the fact that it is open-ended, which allows the IDC to continue participation even in instances where the development horizon is extensive. This has been a lesson from the group’s involvement in a biotechnology fund, where it was found that the commercialisation period could be protracted, given that, beyond the research and development cycle, time had to be allowed for certification and, in some instances, even clinical trial periods.<br />
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“In principle, we will always want to exit at some point, but we are under no time pressure to do so, which I think is a huge advantage,” Swift argues.<br />
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The fund is currently being marketed to prospective clients and there have already been a number of approaches made. However, Swift says thorough due diligences will be required before any deals are concluded. The IDC has significant capacity in-house to conduct such exercises, but will call on consultants in those instances where the technology under review is highly specialised.<br />
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The unit is also keeping close tabs on some of the innovations currently being supported under the Support Programme for Industrial Innovation government incentive, which is administered by the <a href="http://www.idc.co.za/">IDC</a> on behalf of the Department of Trade and Industry. However, Swift stresses that it will also be interrogating various other opportunities.<br />
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<div class="editor grey-text">Edited by: Martin Zhuwakinyu<br />
</div><div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-1942995443110689372009-11-26T03:22:00.000-08:002009-11-26T03:22:37.052-08:00Tax breaks for angel investors<a href="http://www.investorsnetwork.co.za/">Business angels</a> in South Africa received a much welcomed boost in the form of a great article published in the business report this month. Carien Engelbrecht argues that <a href="http://www.investorsnetwork.co.za/">business angel groups</a> in South Africa should be given tax breaks on money invested into new and growing business.<br />
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The report and recommendations make an enormous amount of sense. The small business sector created both jobs and income for the country, in many cases also ensuring an inflow of foreign currency. As the government has always been clear on their support of the small business sector through making available numerous grants and funding initiatives as well as creating bodies like <a href="http://www.seda.org.za/">SEDA</a> and the<a href="http://www.idc.co.za/"> IDC</a> amongst others to support entrepreneurs, this will be a step in the right direction. If cash rich individuals or groups are prepared to risk their money to create jobs, income opportunities and revenue for the country as a whole then surely they are in part supporting what the government is setting out to do. Its a real win-win!!<br />
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Carien Engelbrecht's article follows below:<br />
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Give angel investors tax relief to plug fund gap of start-ups Comments<br />
November 26, 2009<br />
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By Carien Engelbrecht writes for <a href="http://www.busrep.co.za/">Business Report</a><br />
With the unemployment rate running at 24.5 percent, there is much concern regarding the growing social, economic and financial effect of joblessness.<br />
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When quizzed on solutions, almost everyone mouths platitudes regarding the value and importance of building and boosting entrepreneurship as a way of either creating jobs or developing viable alternative lifestyles.<br />
The importance of entrepreneurship as a way of creating employment is supported by research, which has found that small and medium-sized firms account for 41.7 percent of all employment in the private sector, according to Competition in South African Banking, a task group report for the National Treasury and the SA Reserve Bank by Hans Falenka et al, published in April 2004. Every second week, we are told of new interventions to rescue key industries and unlock access to business finance.<br />
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Regrettably, many of these interventions are short on detail and even slower to implement. But perhaps the most serious problem with these proposals is the extent to which they demonstrate a limited understanding of the real-life funding and support requirements of start-ups and early-stage businesses.<br />
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<b>Blooming flowers</b><br />
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If we are to grow entrepreneurship, we need, in the words of Mao Zedong, to "let a hundred flowers bloom". It is obvious that as a business evolves, its financing needs develop and change in parallel.<br />
We accordingly have to create an environment in which the right type of funding is made available in the right amounts at the right time in the life of a business.<br />
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The typical growth cycle of businesses and the matching funding requirements are well understood.<br />
As a general rule, commercial debt funding is only relevant once a business has moved out of the highest risk phases and has developed a sustainable and somewhat predictable cash flow.<br />
Prior to this point, commercial bank debt funding for a start-up or early-stage business is difficult at best and irresponsible at worst.<br />
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The discussions between the government and the banking sector to promote commercial lending, while important to many established enterprises, is accordingly of little relevance to start-up or early-stage businesses.<br />
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But if debt funding is inappropriate, then what are the alternatives? The answer to this conundrum lies in the availability and provision of more risky equity finance.<br />
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This may either take the form of venture capital or may be provided by so-called "angel" investors.<br />
In the US, venture capital funding accounts for about 4 percent of all seed financing for start-up companies. The venture capital industry in South Africa may best be described as "nascent" as professionally managed funds specialising in venture capital-type investments are few and far between.<br />
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It is interesting to note that despite its glamorous image, venture capital is in fact not the most important source of start-up capital in the US. Instead, this accolade goes to angel investors, who are estimated to provide 27 times more seed funding to early-stage businesses than venture capital funds each year.<br />
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So what is angel funding and who are these angel investors? An angel investor is typically an individual or network of individuals who provide capital to start-up businesses, usually in exchange for convertible debt or equity ownership. Angel investors are critical if we are to fill the gap between the financing typically provided by family and friends and venture capital funds.<br />
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Angel investors exist everywhere and are not an American phenomenon. In practice, it is estimated that up to 80 percent of Chinese businesses are funded by angel investors and many countries are taking steps to actively encourage angel investors as part of a broader package of economic stimulus. Unfortunately, in South Africa, there is no angel industry to speak of. And yet, without this funding source, many new businesses will inevitably be starved of capital at a crucial stage in their growth cycle and will be doomed to failure.<br />
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The lack of effective venture capital and angel funding vehicles in South Africa may be at least partially attributed to the South African tax policy, which does not incentivise these forms of investment.<br />
In many countries, extensive tax support is provided to both the venture capital and angel funding industry.<br />
In the UK, the Enterprise Investment Scheme incentivises corporate venturing by providing small investors who invest up to £150 000 (R1.8m) a year, with up-front income tax relief, a capital gains tax exemption on the disposal of shares, deferred taxes on profits (if these are reinvested) and tax relief for capital losses.<br />
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<b>Tax barriers</b><br />
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Similar provisions apply in many EU countries and in the US, where tax credits for venture capital and angel funds are common and in Brazil and Singapore, where venture capital funds are exempt from capital gains tax.<br />
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The South African fiscus has made a limited foray into supporting the establishment of formal venture capital funds through the enactment of section 12J of the Income Tax Act. Tax relief is accordingly directed at investors who purchase new shares in registered venture capital companies.<br />
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Cursory discussions with venture capital players, however, suggest that the effect of the tax relief has been modest at best and that it has certainly not had the desired effect of promoting widespread venture capital investment in early-stage businesses.<br />
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Of perhaps greater concern is the problem that there is currently no tax relief whatsoever for angel investors or angel investor networks who fund early stage businesses.<br />
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This means that this form of funding will probably remain unavailable within the South African environment, with ongoing negative implications for entrepreneurial development in the country.<br />
While we support current government initiatives and the renewed focus on start-up and early-stage businesses, we believe that the government's current approach falls short.<br />
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A crucial step forward would accordingly be for the government to evaluate and restructure the existing tax treatment for venture capital funds and to establish tax-based incentives for angel investors. This would go a long way towards plugging the real funding gaps that plague start-up and early-stage businesses.<br />
Carien Engelbrecht is a director of Aurik, a business accelerator based in Johannesburg<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.comtag:blogger.com,1999:blog-1846530427461675005.post-77646901298342331392009-11-23T11:35:00.000-08:002009-11-23T11:35:18.239-08:00European business angel network reports record year<a href="http://www.oion.co.uk/">Oxford Investment Opportunity Network</a> (OION), which claims to be Europe’s leading technology business angel network, has announced results showing that it has enjoyed a record breaking year of helping innovative companies to <a href="http://www.investorsnetwork.co.za/">business finance</a>. <br />
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The OION Network is headquartered in Oxford but assists growing technology companies from across the UK to secure funding from £150,000 to £2 million. Its investor members include high net worth individuals - ‘business angels’ - as well as venture capital trusts, funds and corporate venturers.<br />
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Investment networks director, Don McLaverty announced that OION’s investor members invested £3.15 million in 15 companies during the past financial year. This direct investment enabled the firms to leverage an additional £10 million of funding from other sources. <br />
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Mr McLaverty said, “I am delighted that OION has enjoyed a blockbuster year as Europe’s most successful technology business angel network, despite the worsening economic conditions since last October.”<br />
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“We think our success is down to three main factors – firstly, the OION Network team has established a very consistent track record of matching investors with high quality, innovative companies that have solid growth potential and who need relatively small but crucial amounts of funding to realise that potential. <br />
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“Secondly, we secured a co-investment programme with a major institution which enabled our investor members to leverage additional funding alongside their investments. This was a unique programme that was exclusive to our OION Network, in which our business angels played a key role. <br />
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“Thirdly, we decided to launch a number of new initiatives during the year including a meetings and investor training programme for new investors. This provides a forum for our new investors to make contact with our experienced members, while also raising technical questions about investing, and has proved to be extremely popular.”<br />
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Unique role of business angels in a recession<br />
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Highlighting the important role of business angels during the recession, Mr McLaverty said, “It is overwhelmingly clear that business angels have a unique role to play during this recession and are more important than ever during these difficult times. They supply a bedrock of investment combined with valuable management experience, often gained during hard times, which can be crucial to the survival and growth of early stage technology companies.”<br />
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Anne Glover, co-founder and chief executive of Amadeus Capital Partners, added, “Business angels are an essential component in the funding of innovation, often having access to companies before they come to the venture capital market. OION plays a key role in this process and I am delighted that the past year has been such a success.”<br />
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OION is one of three investment networks managed by Oxford Innovation, which operates and manages 14 innovation centres providing flexible office and laboratory space for over 350 growing companies.<div class="blogger-post-footer">Become an Angel Investor or find investment for your business at http://www.investorsnetwork.co.za</div>Ben Boteshttp://www.blogger.com/profile/07365762347024490251noreply@blogger.com