Introduction to Angel Finance

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 right for your venture?

Typically, 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:

  • The management team and the business angel are compatible and will be able to work together.
  • Business Angel’s skills match the companies needs

What is the next step in seeking Business Angels?

The best place to find a Business Angel in through one of our members business angel networks. We suggest you look through our member directory and find the best one for yourself, this will most probably be judged on their location, business angels tend to invest locally, or their specialisations.

However, 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 provide straight-forward business information and access to a wide network of business support.  Also, you can get information from the Department of Trade and Industry's Small business Service website.

As a trade association the BBAA does not specifically provide contact to Business Angels. Please note, all Members are Business Angel Networks or groups which have signed up to the BBAA’s Code of Conduct.  We recommend you take a look through the directory and choose the business angel intermediary most suited to your needs, in terms of geographic location, specialisation and investment criteria.

Only BBAA Member Angel Networks and VCs have signed up to the BBAA's best practice Code of Conduct.