Con: Angel investors may set the bar higher
An angel investor’s higher risk tolerance may come with the expectation of a high return. They’re in business to make money, and when there’s a substantial amount of capital on the line, they’re going to want to see a payoff. It’s not unheard of for angel investors to expect a rate of return equaling 10 times their initial investment within the first five to seven years. An unhappy angel investor could mean no more funding from them in the future.
Again, with a bank you’d be paying interest every month on your loan. This is simply the tradeoff you make by going with an angel investor. There’s no interest now, but the angel investor comes with the expectation that their angel capital will grow into something larger.
In short, the pressure to deliver can be intense.
(Hey, angel investors became wealthy individuals with large net worths by being smart and aggressive.)
