Business angels are a good source of equity or risk capital who
invest their own funds. They may also have some knowledge of your type of
business. In return for a share in the business, they will plough in money at
their own risk. They operate very quickly, often making decisions in a few days
based on little hard data after only a few meetings with the person seeking
finance.
Angel networks operate throughout the world and, in some cases, these
networks operate on the internet. In the UK and the US, there are hundreds of
networks with tens of thousands of business angels prepared to invest several
billion pounds each year in new, small businesses. You need to understand their
criteria to have the best chance of raising money in this way.
40% suffer partial or complete loss of their investment, which
suggests they are prepared to take big risks
50% do not conduct research into prospective investments and
55% do not take up personal references, compared with venture-capital providers
who almost invariably do both
90% have worked in a small firm or owned their own business
before, so they know the small business world well
Business angels meet owners five times on average before
investing, compared with venture capital providers who, in general, require ten
meetings
Ten per cent of business angel investment is for less than
£10,000 and 45% is for over £50,000, but they often group together to make much
more substantial investments
Business angels tend to want to invest within a 50 mile radius
of their base
Angels often flock together. Syndicated deals make up more
than a quarter of all deals
Business angels are more likely to invest in early-stage
investments, where relatively small amounts of money are needed. They are up to
five times more likely to invest in start-ups and early-stage investments than
venture-capital providers in general
