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What are Business Angels?
Business
Angels are high net worth individuals who invest on their own, or as
part of a syndicate, in high growth businesses. In addition to money,
business angels often make their own skills, experience and contacts
available to the company.
Business Angels rarely have a
connection with the company before they invest but often have
experience of its industry or sector. The commitment of business angels
is often very strong.
The majority of Business Angels make
investments for financial reasons. However, there are also other
motives for investment, for example, taking an active part in the
entrepreneurial process, and the enjoyment from being part of the
success of a good investment and the sense of putting something back in.
Business
angels are an important but still under-utilised source of money for
new and growing businesses. A typical business angel makes one or two
investments in a three-year period, either individually or by linking
up with others to form a syndicate. Some business angels invest more
frequently.
Are Business Angels for you?
Business
angels invest between £10,000 and £750,000 in an investment. Where
larger amounts are invested in a business, this may be' as part of a
syndicate organised through personal contacts or a business angel
network. The lead investor is sometimes referred to as the "archangel".
Business
angels invest across most industry sectors and stages of business
development, but especially in early and expansion stage businesses.
Most prefer to invest in companies within 100 miles of where they live
or work. Investors in technology companies tend to be more prepared to
travel longer distances.
What do Business Angels look for?
The
methods used by Business Angels to decide which businesses to invest in
varies greatly, however, the following issues are all taken into
consideration:
- The expertise and track record of the founders and management
- The businesses competitive edge or unique selling point
- The characteristics and growth potential of the market
- Compatibility between the management, business proposal and the business angel's skills and investment preferences
- The financial commitment of the entrepreneur
What to look for in Business Angels?
The
company must also ensure that the business angel willing to invest in
them is right for their company. Before signing an agreement the
business must ensure that:
- Business Angel’s skills match the companies needs
- The management team and the business angel are compatible and will be able to work together.
What is the next step in seeking Business Angels?
If
you have read all of the above information and decided that Business
Angels are suitable for your organisation you will now have to take the
next step. Before you take the next step you will have to ensure
that your organisation has a lawyer, an advisor and a comprehensive
business plan. If you are missing any of these items you may wish to
contact one of BBAA’s associates or members who may be able to help. Another organisation which may be able to help you is Business Link who providestraightforward
business information and access to a wide network of business support
or visit the Department of Trade and Industry's Small business Service website.
As
a trade association we do not specifically provide contact to Business
Angels however our Members do. All of our members are business angel
networks or groups who have signed our best practice code of conduct. We recommend you take a look through our member directory
and choose the business angel intermediary that is the most suitable
for you, based on geographic location or the intermediary’s particular
specialisation. If you have any questions or queries please do not
hesitate to contact us at info@bbaa.org.uk
Further Useful Information
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