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In 2015 Jaya Ltd, started a toy manufacturing unit using robot technology. The toys manufactured by the company became popular amongst children. But since the cost of the toys was high, the company could not earn good profit. The business is of high risk along with higher expected returns. The company wants to increase production so that they can reduce cost per unit. For this the company wants additional investment of Rs. 50 lakhs. The company approached Ashok who has just retired from Indian Space Research Organisation and who is an influential person. Ashok agreed to give the loan to the company provided that his loan is converted into equity shares after two years. The company agreed to Ashok’s proposal.(a) What type of investor is Ashok? (b) State any two features of the same. |
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Answer» (a) Angel Investor (b) Features 1. Most angel investors are current or retired executives, business owners or high net worth individuals who have the knowledge, expertise, and funds that help start-ups match up to industry standards. 2. As angel investors bear extremely high risk and are usually subject to dilution from future investment rounds. They expect a very high return on investment. 3. Apart from investing funds, most angels provide proactive advice, guidance, industry connections and mentoring start-ups in its early days. 4. Their objective is to create great companies by providing value creation, and simultaneously helping investors realize a high return on investments. 5. They have a sharp inclination to keep abreast of current developments in a particular business arena, mentoring another generation of entrepreneurs by making use of their experience |
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