{"id":2844,"date":"2020-03-23T17:46:45","date_gmt":"2020-03-23T17:46:45","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&p=2844"},"modified":"2025-08-18T08:40:52","modified_gmt":"2025-08-18T08:40:52","slug":"business-angels","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/na\/knowledge-hub\/business-angels\/","title":{"rendered":"Business angels"},"content":{"rendered":"\n
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\n \n What are business angels? <\/a>\n <\/h5>\n <\/div>\n\n
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Business angels are private individuals who are prepared to put their own money into startup or early-stage businesses in exchange for a share of the company\u2019s equity (i.e. equity finance). Angels may invest on their own or as part of an angel network. Typically, they are experienced entrepreneurs and, in addition to money,\u00a0they bring\u00a0their own skills,\u00a0expertise and\u00a0contacts to the table.\u00a0Business angels plug some of the funding gap that can exist between banks and\u00a0venture capitalists<\/a>, usually investing sums of between N$50,000 and N$5,000,000.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Why choose a business angel? <\/a>\n <\/h5>\n <\/div>\n\n
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In contrast to venture capitalists, business angels are more inclined to invest in startups and early-stage businesses. They may also be more flexible in the way they finance a business because they will have a less rigid time frame for exiting a business (i.e. sale or\u00a0IPO<\/a>).

When it comes to the type of business they might invest in, angels and venture capitalists are similar. They look for business that that have good growth prospects \u2013you\u2019ve a greater chance of piquing their interest if your business occupies a niche market, has a new product or has a clear advantage over your competition. And you\u2019ll need a good business plan.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Is it suitable for an SME? <\/a>\n <\/h5>\n <\/div>\n\n
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From the perspective of your business, you\u2019d benefit from the experience, skills and business contacts that your investor can share with you. Bear in mind your relationship with your investor will likely be close and personal \u2013 so you need to get along well and share goals.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n
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You might also want to consider\u00a0debt crowdfunding<\/strong>\u00a0\u2013 more commonly known as\u00a0peer-to-peer-lending<\/a>\u00a0(P2P).\u00a0Peer-to-peer lending (P2P) is a type of\u00a0business loan\u00a0by a large number of private investors (individuals, businesses or institutions) to your business, usually through an online platform. The idea is that lenders and borrowers get a better rate than they would through banks\u00a0\u2013\u00a0plus decision lead times are significantly shorter. P2P is also known as debt crowdfunding or loan-based lending.<\/em>

Peer-to-peer lending (P2P) is different to standard\u00a0business loans<\/a>. P2P matches private investors looking to invest their money with people who want to borrow it. In theory, compared to banks, P2P pays higher interest to lenders and charges lower rates for borrowers. The stronger your business profile, the lower the interest rate on your loan.

Other types of\u00a0equity finance<\/a> –\u00a0Equity finance refers to the capital an external investor injects into your business in return for a share of ownership (equity) and\/or some control of the business. Equity finance investors therefore have a claim on your future earnings but, in contrast to a loan, you don\u2019t pay any interest \u2013 nor do you have to repay capital. If you opt for equity financing, you\u2019ll sell a stake in your business in return for funds. This is in contrast to\u00a0debt financing<\/a>\u00a0(e.g. a loan or a bond) where you take out a loan and pay it back over time with interest.

Venture capital<\/a> –\u00a0Venture capital is financing given to startups\u00a0and early-stage businesses. Venture capital funds look to invest larger sums of money than\u00a0business angels<\/a> \u2013 typically more than N$250,000 \u2013 in return for an equity stake. Venture capital is most suited to high-growth businesses with long-term growth potential, i.e. those destined for sale or public listing (IPO).

Equity crowdfunding<\/a> –\u00a0Equity crowdfunding is a type of\u00a0equity finance<\/a> whereby people (\u2018the crowd\u2019) invest in an early-stage unlisted company, in exchange for shares (equity) in that company. Individual investors thus become shareholders and stand to profit if the business does well \u2013 they might also lose some or all of their investment. Equity crowdfunding usually takes place over an online platform.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n \n