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What are Business Angels?The United Kingdom has one of the best angel investment markets in the world. There are nearly fifty business angel networks, like Norfolk First, in the UK. They aim to set high standards. They seek to introduce entrepreneurial businesses to angel investors who will buy shares to fund the company's growth. This keeps the balance sheet strong and improves credit ratings. Investors look to buy shares in growth businesses but do so knowing that this is one of the most risky types of investment - so investors' expectations are high. They invest in good management, clearly defined products, services and concepts with genuine prospects of a successful exit. Business Angels are private individuals who invest on their own or sometimes as part of a syndicate for larger amounts. They rarely have a connection with the company before they invest but often have experience of its industry or sector. The principal issues usually considered by business angels are :
In addition to money, business angels often make their own skills, experience and contacts available to help the company. The commitment of many business angels is very strong. Business angel investment is regarded as high risk but if the company succeeds everyone benefits. Rewards can be substantial. But if the company fails, the business angel must be prepared to lose some or all of the investment. Business angel finance sometimes complements venture capital by providing smaller amounts (often under £100,000) at an earlier stage than many private equity firms can invest. Angel finance often helps to make a business more attractive to a bank or private equity firm. 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. But, some business angels invest more frequently. Business angels typically invest between £25,000 and £250,000 in an investment. Where larger amounts are invested in a business, this maybe as part of a syndicate organised through personal contacts or a business angel network. The lead investor is sometimes refered 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. All investments are made for financial reasons. There are also secondary motives; 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. For more information, contact the British Business Angels Association. More info: Potential investors should note that Investment in new business carries high risks as well as the possibility of high rewards. It is highly speculative and potential investors should be aware that no established market exists for the trading of shares in private companies. Before investing in a project about which information is given, potential investors are strongly advised to take advice from a person authorised under the Financial Services and Markets Act 2000 (FSMA) who specialises in advising on investments of this kind. Norfolk First and the Norfolk Network cannot advise on the merits or risks of investment and is not authorised to arrange transactions or circulate offer documents under the Financial Services and Markets Act 2000. Norfolk First is an exempt body for the purpose of arranging deals in investment under statutory instrument 1201 of 2001 as a non-profit making organisation. |
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