WHAT IS AN ANGEL INVESTOR?

An angel investor, or business angel, is a wealthy individual who can provide finance for start-up businesses. They’re usually entrepreneurs in their own right who will already have built up a fortune from their own business ventures, and are looking to invest in companies that can provide a good return on their money. Angel investors can be vital to the success of any business.

Raising finance for a start-up company can be very frustrating and time-consuming. If you don’t have security to offer banks for a loan, or if family and friends aren’t able to help, it may seem that getting your business off the ground is impossible. This is where angel investors come in.

They provide capital for high-growth businesses – businesses that are inherently risky in their nature, maybe because of their unusual idea or lack of track record, but that have huge potential for growth and profit. Profit is, of course, what all investors are looking for in a business.

Their money isn’t a loan, it’s an investment paid into the business in exchange for a share of it and its profits, and usually will involve some element of ownership or control (unless your investor has chosen to be a sleeping business partner). This can be invaluable to any new business, as angels don’t just bring their money; they bring their knowledge, experience and contacts as well. Having been successful in their own businesses they can impart all their expertise onto this new venture, which can often be essential to its success.

Investors will be paid in profits or dividends rather than set monthly repayments, and will often have an exit strategy in place where they’ll get their full return on the sale or takeover of the company. This is why they’re always looking for businesses with the most potential, as it means the best returns on their money.