Angel investors are vital to a startup’s future

How do angel investors contribute to entrepreneurs and the entrepreneurial economy? Let me count the ways.

First and foremost, over the past decade, angel investors have become the de facto source of equity capital for seed and early stage companies. The limited landscape for IPOs and a venture capital model that calls for fewer, larger, and, therefore, later stage investments, have put venture capital beyond the reach of most entrepreneurs.

So while they might wish for a share of venture capital gold, until new businesses reach the growth stage, entrepreneurs’ interests and the interests of venture capitalists usually just don’t line up. On the other hand, angel investors, especially those in organized in angel groups, have goals and interests that are closely aligned with entrepreneurs.

Angels have a high tolerance for risk and take a long-term view. From online submission of business plans to standardized term sheets, dealing with organized angel groups like Oklahoma’s SeedStep Angels can make the capital raising process much more efficient for entrepreneurs.

Angel investors help entrepreneurs determine realistic valuations for their startup companies.

Angels already know an important fact that many entrepreneurs have yet to learn — that overstating a company’s beginning value damages the company’s future changes for follow-on investment.

Angels recognize significant growth opportunities in a business plan.

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