Questions

Reading up on it, I know VCs are not keen on investing in service businesses. But, angel investors are more likely to invest in a service business startup. So I'm curious, what type of exit strategy do angel investors prefer? In an ideal world, I would like to keep the business (not sell it) and keep it as a private corporation, no public shareholders to answer to. That's the goal, but might change . Thanks.

(I've built/sold a service company + raised angel investing 2x + invested in 23 companies as an angel)

The term angel investor can be misleading. Assuming you mean an investor who want's equity for capital, then most never invest in services businesses. Why

1) Too much risk, as it's VERY people dependent
2) Hard to scale - continues to cost money
3) The upside vs. the risk isn't there (1000x returns).

I'm not saying you can find someone to invest money into your business, but they'll likely want some kind of ownership (control) + dividends (ROI) on their money.

That kind of angel is typically another successful entrepreneur with an complimentory (or unrelated) service company looking to diversify + add value through advice, etc, or high net-worth individual that want's a better return on his money then market rates (typically 12%+ per annum).


Answered 7 years ago

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