What are Business Angels?

Business angels, also known as angel investors are individuals who provide capital for business start-up in exchange for ownership equity. Business angels invest their own funds into start-up businesses unlike venture capitalists.

The term business ‘angel’ originates from here in England where it was used to describe wealthy individuals who provided money for theatrical productions. Business Angels are now retired entrepreneurs/executives who are interested in angel investing for reasons that go beyond monetary returns.

Business angels not only invest to get a return on their money they do so to keep up with current developments in their business area as well as to mentor another generation of entrepreneurs. By investing in start-up businesses, business angels are making use of their experience in a way that allows them to work on a less than full time basis.

A business angel is valuable for management advice and to give your business important contacts. Business angels take a high personal risk when it comes to investing in your business but with the right skills a business angel can strengthen a business by offering marketing and sales experience.

In order to gain interest from a business angel you must be willing to sell a shareholding of your business in return for financing. You also need to raise a reasonable and modest amount of money when your business gets up and running.

If you are using a business angel as your form of business start-up finance it is important to develop a good working personal relationship with your business angel so that both of you know exactly what is being done business wise and to make your business run more smoothly.

A business angel will seek investments that have potential to return at least ten times the original investment within five years of the business starting up. A business angel will decide whether or not to invest in your business through what is wrote in your business plan. Your business plan, if wrote to the best standard should be based on convincing market research. A business angel will look at your business plan and use that as well as the time spent talking to you to decide whether your business has the potential to make a decent amount of returns based on the amount they will be investing.  

There are many avenues that you can go down in order to get start-up finance for your business such as banks, family and friends, credit cards and business angels as well as venture capitalists. However for new businesses hoping to gain the start-up finance they need in order to get their business off the ground; business angels are the best way to go.

Here at Angel Start-ups we have the best business angel resources around. Angel Start-ups can put you in touch with a business angel that best suits your needs.