What is an Angel Investor?
An Angel investor is an affluent individual who provides capital for business startups, usually in exchange for convertible debt or equity ownership.
What is Venture Capital?
Venture capital is a specific type of private financing that is focused on startups and emerging growth companies that do not have access to the public markets for capital. The typical venture capital structure is to have general partners who work for the venture capital firm that make investments and limited partners that provide the capital to be invested. Some venture capital companies invest in early stage companies, while others specialize in later growth stages for private companies. Most early stage investors will continue to make investments in subsequent rounds of financing for companies that have the most promise and potential.
How do I find investors for my startup?
As part of our management consulting and strategic consulting practices, QuestFusion provides advisory services to startup CEOs and founders looking to raise capital for their companies. QuestFusion can provide advice and contacts to help in raising capital in a private equity environment at various stages of growth of a new venture. We will also serve as an advisor to companies preparing for a liquidity event.
As an Angel investor in San Diego, we have a network of other Angel investors, “super-Angels,” and Family Offices in San Diego. In addition, we can help you formulate a process to identify the right investors for your deal that are not strictly based in one geographic location. Angel funding can often be the right answer for young companies seeking seed money.
Based on our experience and background in running growth stage startups, we have a strong Rolodex of venture capitalists in our network. VC funding is not always the right choice when considering seed capital or seed funding.
Finding investors is much easier than finding the right investors for your company, especially when you are seeking growth capital funding.
How has private financing changed in the last few years?
Angel financing has become more straightforward and desirable with many of the structural changes in the industry and changes in the regulatory environment, such as the JOBS Act. It is now easier to form syndicates of Angel investors to fund your startup.
Consolidation in the venture capital industry has occurred over the last several years, and there are now clear winners and losers. The winners are primarily billion dollar funds that continue to make new investments in startups. All of these surviving funds have very clear investment objectives, guidelines, and targets. It is now much clearer who invests in various stages of growth and which funds invest in which sectors.
What is Crowdfunding?
Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.
There is quite a bit of confusion around crowdfunding today. The initial form of crowdfunding, pioneered by companies like Kickstarter, was allowing companies to conduct Pre-Sales Crowdfunding of their products in order to fund product development.
With the advent of the JOBS Act, and new rules being established for Equity Crowdfunding, there are now new sources for raising equity capital from a large number of small investors. It is very important that you get legal counsel prior to starting an equity crowdfunding campaign to ensure that you have legal compliance, and avoid later risks that could force you to return the money raised to the investors.
There is even more confusion around the term Crowdsourcing. This can mean just gathering data via the Internet, or it can mean raising money via the Internet. As a startup CEO or entrepreneur, be sure to understand these things before raising any money.