An Angel Investor is a wealthy individual who invests funds in early stage companies usually in exchange for convertible debt or preferred equity. An Angel Investor does not only invest money into the new company but also time, expertise, and personal network to ensure that the business is set on a strong path for growth. Typically, an Angel Investor will be a highly experienced entrepreneur with a demonstrable leadership abilities and strong operational experience or background of creating new and successful ventures.
An Angel Investor can recapitalize your business and give the financial boost it requires to either start off or grow. It is a fact that early stage companies require more than just capital if they are to grow into the next generation of large companies and corporations. Angels contribute management, mentoring, industry, and networking expertise to start-up firms, which are critical ingredients necessary for the survival and growth of the new venture. Additionally, Angels can also make constructive inputs on strategy and execution and open up marketing opportunities and green channels for your new business to grow.
The Ghana Angel Investor Network is a network of Angel Investors (GAIN) who demonstrates a passion for investing in early stage business, which have a significant growth potential and a latent ability to generate disproportionate returns. GAIN is an informal self-governed non-governmental organization that seeks to bridge the gap between early stage businesses and financial resources.
Any entrepreneur is welcome to apply for Angel investments. However, the business proposal will be judged with strict criteria that will identify viable opportunities, which have a high potential to grow and generate significant returns for investors. Attributes such as uniqueness, high entry barriers, and quality of management team are but a few of the pointers considered by Angels. Entrepreneurs who can demonstrate a market validation of their concept or have begun engaging with the market have a stronger proposition. All entrepreneurs are welcome – first time entrepreneurs, second time entrepreneurs, and even entrepreneurs who may have failed at their earlier attempt.
Each Angel can invest a minimum of GH¢10,000. Depending on the dynamics of the transaction and the appeal of your proposal, you may get several angels investing in your business. Angels can invest a maximum of GH¢100,000 either individually or as a group in one particular venture.
All applications going through the GAIN secretariat will go through an initial screening process, which will normally take at least two days. Successful applicants will be invited to submit a full business plan and also make a 10-minute presentation at the next GAIN monthly forum. When you are successful at the forum, Angels who are interested in your business venture will take your proposal and begin negotiation with you off the main forum. When as agreement is reached, a term sheet will be issued to you, after which a due diligence process will be carried out. After a satisfactory due diligence process, the Secretariat will prepare a share purchase agreement which will be signed by the Angel or Angel Group and the entrepreneur before the investment amount is disbursed. The GAIN Secretariat will provide updates on the length of time it would take for applications to be approved on a continuous basis.
Not exactly. When Angels are ready to exit your company after a successful investment period, the Angels or Investing group may give you an option to buy back the Company’s shares after a specified period of time. When this is not possible, they will sell the shares to another equity investor who will take the company to the next step of the growth process. You will be dully and reasonably informed and, depending on how the transaction is structured, may be required to give consent before the sale of shares takes place.
The Angels will invest money in your business in exchange for convertible debt, preferred or ordinary equity. There is no interest charged in the sense that you pay interest when you borrow money from the bank or any other mainstream financial institution. This is what makes Angel investments one of the cheapest forms of capital for early stage businesses.
NO. Angels will only take a portion of the company’s equity shares. Angels are prevented by policy from taking 100% equity shares in any investment.
The Angle investor will typically hold the investment for three to five years. However, this could extend to several years depending on how successful the company will be at meeting agreed targets and milestones. A late exit may be required if the company fails to meet the growth projections agreed before the investment.