Angel Investing Brings Money to Small Communities

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Currently in the U.S., angel investments contribute over 93 percent of all seed funding under $250,000 for small businesses, according to recent research. But this wasn’t always the case.

Currently in the U.S., angel investments contribute over 93 percent of all seed funding under $250,000 for small businesses, according to recent research. But this wasn’t always the case.

Ten years ago, if a start-up in small town Missouri or Montana was looking for capital, their resources were limited. Most big money venture capitalists lived in California, New York or Boston, and tapping into those faraway funds was a lot harder if you didn’t live in on the coasts and didn’t access to industry power players. Big-time venture capitalists were rarely willing to take a gamble on a niche idea in a market they were completely unfamiliar with.

Nowadays, it’s possible to find angel investors not just across the US, but all over the world. Also, investors are more interested in the potential return than where the start-up is based as communication and travel have become so convenient and cheap. Access to these business angels has also become much easier. Websites like Angel Investment Network connect angel investors with entrepreneurs to create a mutually beneficial business relationship based on each party’s criteria.

On these sites, a business entrepreneur from Arizona can list his business idea and the capital he needs and then take offers from business angels in New Hampshire or Illinois, anywhere near or far. Some angels initially put up $2,500, some $250,000 - the potential is endless.

A handful of these sites even specialize in regions, like the Midwest or New England, appealing to those angel investors who do prefer to invest in their local communities. Angels who prefer to take on a mentorship role can offer guidance to their invested start up business, whereas others will scour these listings looking for the greatest financial opportunities or the chance to invest in a potential technological advancement.

With the business angel sector having grown exponentially in the scarce-lending times of the recession, this new model of start-up funding is only expected to grow, making viable business ideas a reality in even the tiniest communities.

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