Business Angels and Angel Investors

 

What is a Business Angel?  A Business Angel (also know an an Angel Investor) is someone who is prepared to invest in a business to help it succeed.  A Business Angel is a Venture Capitalist who will provide considerable expertise and experience, as well as money, to help ensure that the ventures they invest in are successful.

If you are looking for both investment and expertise to launch your new product, realize your plans for business growth, or restructure your business to make it profitable a Business Angel may be able to help.

What is Venture Capital? Venture Capital is investment provided by outside investors (Venture Capitalists) to finance a new, growing or recovering business.  Venture capital is usually provided in exchange for a share in the business or its profits, rather than as a business loan to be paid back with interest.

Venture Capital investments are seen as high risk, high return - if a venture fails to perform as well as expected (between 20% and 90% of the time), some or all of the investment may be lost, if it succeeds, returns of 300-1000% may be possible!  Venture Capitalists are likely to require some involvement in the management of the business to try to ensure it is successful and to provide early visibility if performance is not going to plan.  This would typically take the form of a place on the board of directors.

How to Find a Business Angel.  The internet may help to find a suitable Business Angel either as an individual investor or as a member of a Venture Capital Fund or Association - obviously some are better than others.  Find out what you can about them - What are their areas of expertise? What other companies have they helped? What can they offer to your business?  However, they should not need to prove themselves before they provide you with their money!

Having found or selected a potential Angel Investor, you will need to present and sell your ideas and plans to them to convince them that your business is a good investment.  Explain your ideas and business models clearly, demonstrate that you have properly researched the market and have a sound plan that just needs their finance to fuel the profit machine.  Try to be open and honest - if they are to help they will need all the facts.  Also be prepared to listen - they will not be able to invest their expertise if don't!

Business Angels will not be looking to stay involved in your business forever. Typically they will look to "harvest" their investment (or cut their losses), within about three to seven years, by selling their shares, options or other forms of equity.

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