Angel investing involves wealthy individuals offering finance directly to businesses in return for a share of equity. They normally provide advice and expertise in addition to funds.
What is Business angel investing?
Angel investing is the largest source of funding for start-up and early-stage businesses seeking equity to grow. As a form of equity finance, angel investing is undertaken by wealthy individuals, or groups of individuals, who invest their own money in return for shares in the business.
These investors, known as business angels, make their own decisions and invest on a private basis. In so doing, they usually want to meet business owners face to face and hear them pitch their business. In addition to funding, business angels will also provide experience and expertise to support the business and maximise the chances of success, even taking a role on the board.
In terms of time frames, angel investing is often called “patient capital”. Investors tend to take a longer-term approach of between three and eight years. This makes them more willing to support a business as it grows, rather than look for quick ‘in and out’ returns.
How much do angels invest?
In general, individual business angels will invest anything from £5,000 to £150,000 in a single business. But with business angels increasingly investing together in syndicates, larger amounts of funding can be raised.
Where to find an angel investor
The UK Business Angels Association (UKBAA) represents around 100 organisations. They include the vast majority of business angel networks across the UK, over 20 early stage venture capital funds, and professional service providers and advisers such as accountancy and law firms, corporate finance, banks, regional development agencies, universities and public policy‐makers.