What are the Cons if Entrepreneurs Receive Funding from Angel Investors?

[Suba]

Angel investors are capital owners who will invest in new businesses or start-ups and will receive rewards like shareholders. An angel investor has high business experience and a wide network, they also often join communities or angel groups. Of course this type of cooperation will be mutually beneficial. However, behind that angel investors will also have many disadvantages or cons for new entrepreneurs. What are the cons of angel investors in your opinion?

 

[Augusta]

Yeah there's always higher expectations from the investor, potential for the investor to meddle in the business, and the risk of loss of equity.

 

[Suba]

Yeah there's always higher expectations from the investor, potential for the investor to meddle in the business, and the risk of loss of equity.

That's right, when we receive funds from an angel investor, there will be an equity delusion where the scale/percentage of business ownership is reduced according to the portion of capital, besides that we also have to share the profits.

 

[oliver991]

One big con is misalignment of vision. Even if the investor has experience, their ideas might clash with the founder’s goals or long-term direction. Some angel investors want fast returns or more control than expected, which can create tension. Plus, once you give up equity, you're giving up part of your leverage. That’s fine if you’re prepared, but it’s not always worth the trade-off if the support isn’t aligned with your core values.

 

[Springtime]

If you accept funds from angel investors, they have the right to meddle with how your business should be run and also share your profits.

 

[Augusta]

Angel investors may set high expectations for growth and return on investment, potentially creating pressure on the startup.