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STORIES: With Great Influence Comes Great Responsibility

Fund A Startup: Your Guide To Becoming a Business Angel

Fund A Startup: Your Guide To Becoming a Business Angel
February 28, 2017 Oluwatosin
Photo: Studio 24 Nigeria

The Lagos Angel Network was setup because a group of forward thinking business people had a plan; to help develop the economy in ways the banks and government might be unable inadequate. By providing funding for startups and small businesses, there is a level of growth and development in the economy. Especially in the startup and sustainability of a sector, the tech sector in Nigeria.

An angel typically provides

  1. Money
  2. Access
  3. Time

While these things seem easy for the young and intending Angel Investor, an investment is founded on the principle that money will be made back. Statistics show however that three out of five new businesses fail so, whenever an investor has a hit rate of 40 to 50 percent, that is great investment. Venture capitalists, Banks and Equity investors do not provide the seed investment many businesses require to grow and function. Investment is necessary because most startups are usually not good enough to be bought or invested by the Venture capitalists.

Photo: Studio 24 Nigeria

Photo: Studio 24 Nigeria

As an Angel investor, the following are necessary.

  1. Lose money: An investment is a gamble and for a newbie in investing, a 20% hit rate is good. Later, any investment in five companies with three failing is a lot of good. The right and diversified investments will recoup the lost money.
  2. Focus: An area, a specialty is nice as you’re able to research and as you grow, make better informed investment decisions. Moving around from all the sectors might lead to bad investments which will lose a bulk of money.
  3. Join Investor groups: The education and the information for investment decisions is extremely expensive. Opportunities for mentorship, fellowship and basic information from more experienced Angel investors could prove invaluable and especially cheap.
  4. Figure gaps within sectors: The presence of gaps shows room for growth and optimum investment opportunity. There are some essential fields like research into food, power and automation that are the future of things. Gaps in these sectors could prove as the ultimate investment destination.

The Lagos Angel Network is looking to expand their operations outside Lagos through new syndicates. These syndicates are appendages to the main network and sometimes raise capital to fund new exciting businesses. Despite the potential fun in investing and making returns and profits, advice is given to new members to avoid using their principal monies. The acceptance of membership into the Lagos Angel Network is stiff as new members are always required to show proof of income beyond a certain level.

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