Angel investment as a financing form differs from traditional financing options in terms of the search process, securities, and capital and interest expectations. The assessment conducted by an angel investor goes deeper than the assessments of traditional financing providers. Instead of financial situation and solvency, growth potential and prospects are examined. Angel investment also differs in that angels often wish to bring added value and to act in an expert capacity in the company (influence earnings on their investment), which a bank or other financial institution usually has no wish to do.

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Before applying, entrepreneurs should realise that a decision to seek investment is also a commitment to sell the company provided that a potential buyer is found(sufficiently high price). The company should not, therefore, be a life mission for an entrepreneur, but instead it should be just one phase of their professional life. There is a considerable difference in the philosophies.

Before searching, it is a good idea to consider a few issues:

  1. A company should be financed, as far as possible, with personal assets and those of family or friends and above all, sales.
  2. If a company does decide to seek an investor, entrepreneurs must decide on how large a share of the company they are psychologically willing to relinquish.
  3. The advantages and disadvantages brought by investors to the company in its present situation should be assessed in advance.
  4. Entrepreneurs should realistically determine their financing needs and the basis for these.
  5. Entrepreneurs should learn the way and the principles under which business angels invest.
  6. After taking care of the above, it is easy to determine the ideal profile: What kind of investor is desired for the company? What know-how and networks are needed? How much of the investor’s time is required?
  7. … and only after all the above, should the entrepreneur make the first contact with investors.

Before applying, it also good to make sure that the company is in a limited liability form and that all the necessary documentation is ready so that an investment process which has started off well will not founder. A list of the most commonly requested documents is provided at etula.fi/documents.

If it seems that resolve exists but you are bothered by uncertainly, do not be discouraged; instead get in touch with an expert who can help you move forward. –