Angel Investment Funds

An angel investor is a person with a large amount of wealth who provides financial backing to small start-ups or entrepreneurs, usually in exchange for equity in the company. Angel investors are often found among an entrepreneur's family and friends. The funds provided by angel investors can be a one-time investment to help get the business off the ground or an ongoing infusion to support and carry the company through its dicult early stages.

Mexico has an important network of angel investors that enable projects with growth potential and therefore profitability. Given the current size of the sector, the

Crowdfunding

Crowdfunding is an English term that refers to a type of collective financing carried out through online platforms, in which small contributions are used to finance a certain project or initiative. Crowdfunding connects people who have a business idea and need funding with others who are willing to invest a certain amount of money in exchange for a reward, not always monetary. In this regard, there is no limitation: on the platforms you can see crowdfunding campaigns aimed at raising the money needed to carry out musical projects, publish a book of photographs or other creative projects.

most appropriate funds are those corresponding to the seed stage. In this modality and as its name indicates, "seed" or "angel" investors are usually the first investors in a business, followed by risk capital firms and finally private equity firms.

Angel or seed investors participate in businesses that are at such an early stage that they may have no revenues and few or no customers. They generally have a well-developed business plan, a prototype, a beta test, a minimum viable product (MVP) or are at a similar level of development. Some of the companies, however, may have revenues or even cash flow but it is rare.

While there may be variations, the process is similar for all: a crowdfunding platform is chosen; the project is presented with a description, time required to put it into operation, reward modality; is published and it is at this time that the project campaign will be available; finally there is a closure of the project whether or not the totality of the requested funds has been obtained. The platform is responsible for managing and ensuring that the reward model is fulfilled or, in the event that it is not carried out, that contributions are returned.

The most common types are shown below:

Reward Crowdfunding

This is the most common crowdfunding model. In this type of campaign, investors make a monetary contribution in exchange for a product or service related to the project in which they are investing, generally having preferential access to the product or service offered.

Shares crowdfunding

It is another of the most used kinds. Through this model, the micro-investor receives as consideration the possibility of being part of the project as a shareholder through shares or participations in the company. By becoming shareholders of the company, investors receive a percentage of the profits, depending on the contribution made.

Donation crowdfunding Loan crowdfunding

There are a wide variety of projects related to social causes or solidarity projects that follow this financing model. In other words, the idea or project is presented, and donors contribute out of empathy for the cause, without expecting anything in return

Also known as crowdlending, it is the model most similar to the traditional financial system. In return, the lender is offered an interest rate on the money lent, although this interest rate is generally much lower than the market rate