Finance Angels

What is a Business Angel? 
Business angels are, arguably, the best way for a seed or new company to obtain financial input. Business angels are wealthy individuals who have already become successful in their own field and now want to invest in fledgling companies. There are also groups of angels, normally divided either by geographical location or by expertise such as IT or service sector.

Of course, the general aim for business angels is to make a huge return on their risky investment. Be that as it may, there is also an element of wishing to mentor new business entrepreneurs to ensure their future success.

An In-Depth Look at Business Angels
As business angels are individuals looking to invest, the offerings differ substantially from angel to angel. Business angels tend to offer an investment of between £10,000 (GBP) up to £750,000, either as individuals or as a group of angels. Some angels are happy to invest cash without taking an active role in the company, although most will insist on having at least a reasonable say in the business’s decisions. This is actually a huge benefit, as angels are usually extremely experienced and can offer advice and contacts that are invaluable to a new business.

How Business Angels Select Their Investments
When business angels are looking to invest, they have to take into account several different factors. The most important factor is the long-term financial viability of the company including predicted future sales as well as sales to date, although there are other factors that can sway the decision to invest. 

Having a solid business plan and budget is absolutely essential in order to attract a business angel as, indeed, is evidence of financial commitment from the business owners themselves. Angels will also be keen to know that their skills are complementary to the current skills’ set of the business that they are joining.

Locating a Business Angel
There are multiple organisations that offer a matching service between angels and businesses, so it is well worth investigating what is available in your specific area. Furthermore, there is a British Business Angels Association where angels can register. The association also keeps a list of agencies that can be contacted by fledgling businesses and is an excellent starting point for those looking for the perfect business angel!

Summary

  • Business angels are one of the best ways for a new business to find financing when they are in a start-up stage that would not attract traditional external investors
  • Often, business angels also offer a mentoring facility and will be available to assist new managers in running their fledgling enterprise
  • Numerous agencies exist that offer a matching service and these should be considered by anyone looking for a suitable investor

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