What is a Business Angel?

A Business Angel is an investor that provides development capital to growing companies or new companies. More and more investors are realising that becoming a business angel can be an attractive alternative investment with the additional benefit of becoming involved in an exciting growing business. A business angel is a wealthy investor who is willing to risk investing in a startup in exchange for a stake in the company. A business angel with the right skills can strengthen your business by adding skills or experience that you lack.

Angels expect you to have a clear idea about what the funds you ask for will be used for. Angel investors understand the needs of a new business through their own experience and are able to advice and aid the companies in many ways. Angel capital fills the gap in start-up financing between “friends and family” (sometimes humorously called “friends, family, and fools”) who provide seed funding, and venture capital.

Angels seek profit, but they also enjoy the excitement of being involved in early-stage companies in trendy fields. Angels take a vested interest in the business and an active role as they are taking a risk by investing in them. Business angels are usually former entrepreneurs or executives that have past experience and business skills which can help provide capital and business advice often in return for shares in the business. Angel investors or Business angels can be a great way to finance your business; they will often be entrepreneurs that have successful businesses of their own.

Businesses are unlikely to be suitable for investment by a business angel unless certain conditions are fulfilled. However, being a business angel is not just about providing a source of finance, they add to the overall business mix and can offer guidance and mentoring to the companies in which they invest. To attract a business angel you need a solid business plan. But just as important is guidance and encouragement from a business mentor. The fundamental difference between a business adviser or consultant and a business mentor is that the adviser will work to find a solution for the client, whereas the business mentor provides a different point of view and acts as a referral point, encouraging the client to assess and explore options, develop new skills and make informed decisions.

Rob

www.davisonconsultancy.co.uk