TL;DR - Some founders might not want to seek angel investment because they can make it without it; they do not want to lose control; it makes any failure more visible and less within their own control; it increases risk; and/or some investors are not helpful.
Helpfulness - 4
Tags - outside capital, startup financing, raising capital, angel investment
- What do angel investors look for in startups?
- What are some reasons for founders to not seek angel investment?
- Angel investors look for startups that have an experienced team, good product-market fit, growth potential, defensibility, and a reasonable shot at a successful exit.
- Some reasons why founders might not want to get angel investment are:
- 1. Some can make it without outside capital
- e.g. if a startup has a strong position in an interesting niche and it can fund its growth with revenues, there’s no need to raise outside capital
- 2. Some may not want to discuss key decisions with a board of directors or compromise with them
- 3. Having investment makes any failure more visible and less within the founder’s own control.
- 4. Investment increases risk; the penalties for failure are higher because other people and their money are involved.
- 5. Some investors may only care about their interests (financial returns) and not about the company.