Focus on Investors Investing in Entrepreneurs

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  1. Investors investing in entrepreneurs
    1. The current investment mechanism.
    2. What is the market value of what you invest in entrepreneurs?
    3. Prerequisites for expanding investments
    4. Involvement in management

Meet the investors who invest in entrepreneurs from a wide variety of global companies. Most of the people known as angel investors are business owners, former executives, and people who have successfully started businesses.

Many investors invest to encourage and support young entrepreneurs and startups using their wealth and experience.

Investors investing in entrepreneurs

The size of the investment depends on the attitude of each angel investor, but it is estimated to range from a few million yen to several tens of millions of yen per company. Some well-known business angels seem to operate under such rules as "2 million yen per company."

They invest in a company's stock with an objective purpose. By acquiring shares through investing in the target company (income deduction or profit deduction from the sale of shares).

The current investment mechanism.

There are various ways to obtain funds from business angels, but third-party placements and convertible debentures with stock buybacks are often used for publicly traded limited liability companies.

In third-party placements, the company raises capital by giving business angels the right to subscribe for new shares.

A CB is a corporate bond that, under certain conditions, has the right to be converted into stock. Investors can convert them into stocks or hold them as corporate bonds, depending on the conditions.

What is the market value of what you invest in entrepreneurs?

In the case of a limited liability company, which is not a stock company, the capital and management must be different, so you should consult the law on limited liability companies and the provisions of the company's articles of association when deciding whether to make an investment.

If you use only your own funds, you are, of course, free to make all management decisions or, as a last resort, close your company - there is no such situation.

For accounting purposes, it is recorded as a liability until it is converted into shares. In addition, a special resolution of the general meeting is required in both cases.

Prerequisites for expanding investments

The number of investors is still smaller than in the U.S., but while risky business attracts attention, it is mostly experienced executives who have run leading companies for many years and those who have successfully created IT companies who invest.

As the number of investors grew, so did the term "investment." In addition, the government introduced a system of tax incentives, an "angel tax" system, to support business start-ups and encourage investment.

Involvement in management

Although it is a merit and a duty, there seem to be cases where investors are not satisfied with what they see as kindness and goodness, and entrepreneurs perceive it as "unnecessary interference."

The entrepreneurial investor is also a human being. When interpersonal relationships fail, it can have various consequences.

An enterprising investor is also a person. When an interpersonal relationship fails, it can have a variety of consequences.

Conclusion

Under the angel tax regime, there are two main incentives for individuals who have invested in a business that has been operating for less than 10 years (under 10 years) and who have purchased stock in that business.

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