Why Shelf Corporations funding is better than angel Investing

 

As a business owner, you must have felt overwhelmed after coming across so many business funding options. It is only natural to feel pressurised into making the right decision and choosing the right type of funding for your business. To make things easier for you, we have compared two popular business funding options, Angel Investing and Shelf Corporation funding. 

 

This article will give you an insight on why shelf corporations funding is better than angel investing. But before we get started on comparing, let us understand how these two types of funding work. 

 

Shelf Corporation funding 

 

Shelf Corporations or aged corporations are companies that are bought and kept on the shelf to age with the sole aim to increase the company's credibility. The history of longevity increases business credibility and makes your business appear more trustworthy, professional, and experienced. Most lenders and suppliers consider the age of a company before establishing any business relationship with the company. The shelf corporations although established have no history of operation at all and come up with no liabilities. 

 

Angel Investing 

 

Angel Investors are wealthy individuals that have a lot of money in their hands to invest. These investors invest in small businesses and start-ups to provide the funding required to get their business off the ground. The investors do not have to be experienced businessmen or have industry knowledge they can be anyone with a lot of money, like lawyers, doctors, etc. This is one of the reasons why it is considered risky, moreover, you will also have to offer a piece of your business in exchange for promising funds. 

 

Angel Investors usually put unnecessary pressure. 

 

Angel Investors usually have unrealistic expectations from the business owners, since they have a higher risk tolerance than banks or other traditional forms of lending. They invest in your company to make money and in order to make sure that they get a profit return on their investments, they are most likely to put unnecessary pressure. If you do not satisfy your angel investor, then it may be difficult for you to secure funding in the future. Unlike Angel Investing, shelf corporations won't put pressure on you and you won't be putting yourself at risk of losing your funding. Moreover, a shelf corporation will only open doors for more funding options. 

 

Business independency 

 

When you acquire funds from an Angel Investor, you are handing over a portion of your business in return for the funds. In simple words, you are giving away your future net earnings. Depending on how much the angel investor is investing, they may ask for a higher percentage of equity or royalty in your company. 

 

On the other hand, when you buy a shelf corporation, you sign a transfer agreement, known as the "contract of sale", to transfer the shares of the previous owner to you. As the new shareholder, you will have complete control and autonomy over your shelf company and won't have to trade a portion of your company. 

 

To conclude, shelf corporation funding is less risky and safer than angel investing. Shelf company providers usually provide professional assistance and reliable counsel than angel investors.