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The next level and type of funding is Angel Investors. The phrase is deceiving, these
individuals don’t offer funding in return for nothing, they usually request shareholding in
return for capital provided and tend to be more passive as far as involvement in the
business is concerned.
They don’t offer the type of money venture capitalists offer but offer (typically) more than
what a technology startup entrepreneur would raise through bootstrapping or as seed
capital because they are usually wealthy individuals or families who are looking to diversify
their investments.
‘Angels” get involved in the early stages of a business but typically not as early as seed
investors. They’d want to see some sort of research and plan in place, perhaps a pilot or
prototype before even investing.
Like seed investors, as soon as the business raises further rounds of capital that is many
times more than what they invested, they are likely to sell at a profit as their interest is not
operational but purely profit and investment based.
The advantage for the technology startup entrepreneur is that the angel investor gives you
access to the amount of funding that you’d only get from the “Sharks” with less stringent
terms in exchange for shareholding.
Adventurous Capitalists
venture capital [noun] – funds invested in a new business enterprise.
As a technology start-up entrepreneur you’ve probably heard of “Growth funding round” or
“Series A funding round”, this is when a venture capital company invests in your business
after all the previously mentioned rounds of funding (especially seed funding) with the sole
aim of realising a profit either through the sale of the company or an Initial Public Offering
(IPO). IPO’s are not common for technology startups in Africa so the most likely outcome
after the “adventurous capitalists” have invested in your company is that they will sell it
later, for a profit.
Unlike the “Angels”, venture capitalists tend to bring technical and managerial experience
and skills along with capital to the companies they invest in. VC’s mainly invest in novel or
niche technology start-up businesses or technology start-ups that have a different business