Case Study I
1. CASE STUDY: Why Business Angels Say no? For early-‐stage business projects there is no better source of funding than Angel investors. Angel investors review thousands of business start-‐up applications every year with only a small part of enterprises actually receiving the required financing.
There are a few rules that may influence an angel investor’s decision in rejecting an investment opportunity: Trust intuition: Deciding on a particular investment, experienced angel investors will use their instinct to make the final decision. Credibility of the proposed business plan, the entrepreneur’s presentation, due diligence findings, etc are the most influencing I making their decision. Any doubt of an angel investor regarding a particular investment will mean a definite rejection of the application. No underfunding: Most entrepreneurs usually tend to underestimate the finances required for their businesses and request an extraordinarily “shallow” amount of capital from investors. Most angels understand that most of these “underfunded” companies will eventually generate very little or no return at all. Such type of a company will most likely seek additional funding to reinstate their losses, while angel investors usually prefer to stay away from companies that may require these follow-‐on investments. Most angel investors believe that an underfunded
There are a few rules that may influence an angel investor’s decision in rejecting an investment opportunity: Trust intuition: Deciding on a particular investment, experienced angel investors will use their instinct to make the final decision. Credibility of the proposed business plan, the entrepreneur’s presentation, due diligence findings, etc are the most influencing I making their decision. Any doubt of an angel investor regarding a particular investment will mean a definite rejection of the application. No underfunding: Most entrepreneurs usually tend to underestimate the finances required for their businesses and request an extraordinarily “shallow” amount of capital from investors. Most angels understand that most of these “underfunded” companies will eventually generate very little or no return at all. Such type of a company will most likely seek additional funding to reinstate their losses, while angel investors usually prefer to stay away from companies that may require these follow-‐on investments. Most angel investors believe that an underfunded