Small businesses turning to angel investors

Small businesses turning to angel investors

Recent research by the Center for Venture Research shows that angel investors are helping more entrepreneurs than ever get the early-stage funding they need to start a corporation.

The study found that even during the recession, angel investors funded more than 57,000 small business projects last year – a 3.1 percent increase over 2008. Thirty-five percent of those investments were for either seed or startup money. Those investments also resulted in the creation of 250,000 new jobs in the U.S. last year.

TheStreet.com says that in addition to funding, business owners can also get a number of unintended benefits when working with an angel investor. The site says that because the investors are generally in the same geographical area as the business owner, they can often act as a mentor for an entrepreneur.

Many states, including Minnesota, Wisconsin and Connecticut, have recently passed tax credits to encourage lending. The recent federal financial reform bill threatened to severely restrict financial investments made by angel investors by imposing a 120-day waiting period. After complaints from entrepreneurs and business owners, the waiting period was eliminated.