CARTOONS BY CHRIS BRITT

DISADVANTAGES
Investor expectations. Angels take a risk/reward approach to investing. In most cases,
they are taking a risk on you as a company. The greater the risk, the more they will want
in return. They may seem greedy, but they are only protecting their interests.
Loss of control and future profits. Once you sign on the dotted line, your angel may now
be your business partner. Because they have skin in the game, they might want to have
a say in your operations. Of course, you can outline roles and responsibilities in your
agreement, but you have to expect to lose at least some control in exchange for financing
and you will ultimately be responsible to your investor for your success.
Limited funds. Angel funds can be significant, but you are limited to the amount that
your angel wants to invest in your company. When he or she is tapped out, then you will
need to find another option. Chances are an angel is unlikely to want to keep pouring
money into your business unless you can show strong profitability and growth.
ANGEL INVESTOR EXAMPLE
Apple Computers was not even a year old and had only sold a couple hundred
computers when Mike Markkula arrived on the scene in 1977. He told Steve Jobs and Steve
Wozniak that he was willing to invest $250,000 in the new company in exchange for a
third ownership in Apple. Mike not only brought money to the company, but experience
and connections, ones that helped Apple get the venture capital it eventually needed to
grow into the multi-billion dollar company it is today. Without Mike, there never may
have been a Macintosh or an iPhone.
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