Question

Read the passage given below and answer the questions that follow.

ABC Ltd. is a hardware manufacturing company listed on National Stock Exchange. The company operates only in Delhi-NCR. The management plans to expand their area of operation across the country. They require funds for their expansion plans.

1. Briefly explain the Angel Investors’ source of finance.
2. State whether the Angel Investors’ source can be used by ABC Ltd. or not for raising funds. Give a reason to support your answer.

Answer 1

1. High-net-worth individuals known as angel investors give startups and small businesses early-stage investment in return for convertible debt or stock. They also provide industry connections, strategic advice, and coaching.
2. No, ABC Ltd. cannot use angel investors as a source of finance. Angel investors typically fund startups or unlisted early-stage companies that are in their initial growth phase. Since ABC Ltd. is already a listed company on the National Stock Exchange, it is beyond the stage where angel investors operate. Listed companies generally raise funds through equity shares, debentures, or institutional investors, not through angel investment.