Angel Investors play a crucial role in a business' life cycle and the U.S economy.
For example, when at the Seed and Start-up stages of a new company, the capital
that an Angel Investor can provide will add valuable growth and expansion for the
early business. Suppose an Angel Investor is active in day-to-day operations or as
a board member. In that case, even more benefits and experience can be added
to the young entrepreneurial endeavor or management team. Lior Poly argues
that without this help, many novice entrepreneurs may never build large thriving
According to Lior Poly, Angel investment bridges the gap for companies that are bootstrapping to seek institutional funding later. Bootstrapping is the building up of a company from the ground up with nothing else but the savings of the entrepreneurs who started the company and the profit from the first sales made by the company. Lior Poly states that Angel investment covers a broader area of different business stages, which is partly due to the many types of Angel Investors. Lior Poly says that there are four primary types of Angel Investors and they are:
- Passive Angels
- Professional Angels
- Active Angels
- Super Active Angels.
Passive Angels will most likely invest through a fund or a Private Placement Memorandum, without direct involvement with the company. In that sense, Passive Angels tend to be categorized similarly to Crowd Funding means of garnering capital since the entrepreneurs and the Passive Angels will rarely ever come into contact with each other,
When the entrepreneur is at the Seed Stage and has the least amount of money to spend on services, then the work done by a Professional Angel will have the most value. In his experience, Lior Poly discovered that the difference between Professional and Passive Angels is that Professional Angels invest time into an entrepreneurial endeavor in exchange for shares.
Active and Super Active Angels
Active and Super Active Angels may even get involved during the Start-up Stage and strategically build the company throughout this critical point, and continue through to the Expansion Stage, in which case they will exit as part of the capital influx. One of the most substantial benefits of a company having an Active Angel on their side is the wealth of experience that the investor will have with actively growing businesses. These Active Angels can cut years off the typical Business Life Cycle and set the stage for institutional Investors.
Less than 1% of companies have reached the pinnacle of being a Market-Maker Mega Company without Venture Capital. However, seeking out Venture Capital is incredibly risky, and many entrepreneurs fail to do so for a catalog of reasons. Lior Poly affirms that Angel Investors can help new companies travel down the road to mega company success by essentially teaching entrepreneurs how to walk before they run. Venture Capitalists, after all, land further up the Business Life Cycle where expansion and Later-Stage companies possess greater potential, better track records, and larger capital requirements. How these successful companies obtain those valuable assets can be traced back, many times over, to Angel Investors. Lior Poly is also an affiliate marketer and adds that he wouldn’t shy away from market gaps that seem competitive because those are the ones that have a lot of opportunities to earn. He also advises that you look for a market gap that will forever keep you in business because people always have use for your products and one that has a large customer base.