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what is a difference between angel investors and silent partners ?

I have a confectionery store in houston, tx looking to expand, I do have another location in mind but do not have enough capital to expand. If i can purchase this business, I know my business will increase tremendously. I can not ask for loan in the bank because, I did not start out too well. Now with 6+years in business, I know enough to increase the business possibly nationwide in the near future.

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Answers (2)
Robert Cutler
Attorney
New York County, NY

Just to supplement Julie's points below, a silent partner can be an angel investor (i.e. a high net worth individual) as Julie describes, but it can also be a private equity fund with a preferred equity position, which is an option you may want to consider if your business has solid profit margins and you do not want to relinquish control.

Jan 14, 2010
Julie A. Barnes, CPA
Small Business Exchange, Inc.
Travis County, TX

Hello Ki,

Silent partners are a subset of angel investors. That is, many angel investors (A.I.) may want to simply invest without substantial control. However, it's been my experience that most want to contribute in some way and will want an equity position.

This is often a very advantageous arrangement - most A.I.'s have both substantial experience and expertise, as well as contacts. Of course, you give up some measure of control but you gain a mentor.

Thanks and Good Luck!
Julie A. Barnes, CPA
President, SBX, Inc.

Jan 14, 2010

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