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An angel investor is a private individual who invests their money in a company other than their own company. A business, including a family business, can get capital for their business either from their own resources, from friends or family, from a bank loan, from venture capital, or from an angel investor. A family business might seek capital from an angel investor if there are impediments (e.g., availability, timing) to their securing funds from a bank. Some successful family business owners become angel investors themselves – especially after retirement.

Frequency of family businesses using angel investors

About 92% of informal investments (i.e., other than banks and venture capital) in family businesses come from friends and family, and only 8% from angel investors. Even in difficult economic times, when it may be difficult to get a loan from a bank, family businesses are not that likely to secure funds from angel investors. (Bandyk, 2008).


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