Business angels (or
angel investors) are wealthy individuals, often entrepreneurs themselves, who provide finance for business start-ups in exchange for an equity share. They often invest in high-growth businesses, where the risk is high but so is the potential for return. Angles aren’t adverse to risk, so if you’ve been turned down for investment before they could be your ideal option.
Using a business angel isn’t like sourcing a loan that you have to pay back with interest. They have a share of your business and the profits, and will often invest more than once to make the business successful.
They not only bring money to the table but many will also bring their own skills, experience and contacts, and are just as motivated as you to make your business succeed because of their own stake in it. Many will have already amassed their own fortune from business ideas themselves, so will have a wealth of knowledge they can impart onto you and your business.
A business angel will typically provide investment when a bank won’t, or when the level of funding required is too small for a venture capital firm to consider investing. They usually invest their own funds, and while many invest on their own an increasing number are forming angel “networks” to pool their resources, knowledge and capital.
Angels will often specialise in their own area so they’re even more likely to help you succeed – you need someone who knows the market well and can help you make the right decisions. Unless you’ve got a sleeping partner, an angel investor can be a valuable asset for more reasons than money alone.
Angel investment is becoming increasingly popular, and more and more people are choosing to raise finance this way. And it isn’t surprising – business angels can be an extremely important asset to a business, and are often vital to its success.
