Unlike a business loan that requires repayment irregardless of the success of the business, angel capital is a form of equity capital derived from wealthy individuals and experienced entrepreneurs looking for a large return on investment. Angel capital is generally offered to nascent companies with the potential for profitability and rapid growth in exchange for ownership shares and influence over company decisions. Angel investors, like venture capitalists, make their return on investment in the event of an Initial Public Offering or the trade sale of the funded companies.

Angel capital is a good source of funding for new or developing companies looking to bring in some initial capital. Generally these businesses are too small or too undeveloped to raise capital in the public markets or secure traditional financing from the bank. The typical range of angel investment is between $25,000 to $100,000 for an individual angel investor, and up to $1 million for a group of investors working together.

To see if angel capital would be a suitable financing option for your company, here are a few of its pros and cons:

Pros

• You get relatively quick access to funding

• Good for early-stage businesses

• You can access moderate sums of money without worrying about repayment

• Receive guidance from experienced entrepreneurs and investors

Cons

• There is a lot of competition for funding

• You need to present an eye-catching and well thought out business plan

• Generally, funding is limited to relatively small amounts

• You will no longer be the sole owner of your company

• You may ultimately lose control over the operations of your business.