Some business angel networks (BANs) specially in developing countries have very few investments, what are the challenges that they face in increasing their investments?
The quality of the business concept, and how this is translated into operational reality, are among the hurdles that are not given sufficient attention. Proposals tend to focus on using standard capital budgeting tools such as NPVs to value the business. In reality, for businesses where "business angels" tend to look at are small with limited operational experience (and expertise). Under this situation, the "sophistication" of being able to do fancy financial models usually amount to very little in terms of the "business angels'" ability to assess the feasibility of the business, and the ability of the proponents to bring the business to a viable outcome.
In the end, the enthusiasm of the proponents (often exaggerated) and the caution that "business angels" tend to assess the business prospects, would end up opening a wide gap that is difficult to close within negotiating range for a deal to be feasible.
Many times the entrepreneurs have an exaggerated enthusiasm, thinking that they have invented "the wheel". This enthusiasm, usually, is not accompanied with market knowledge and solid competences. If you ally this to "ridiculous and utopian" finantial projections you will see that not many Angels would be willing to invest!
For start-ups, bussiness plans are not very suitable because as I mentioned they are often utopian, I suggest Bussiness Model Canvas. This later model forces the entrepreneur to look to his /her idea in a 360 degrees perspective.
- Badges
- Science topic
- Similar topics
- Econ
- Business Economics