Business angels

Business angels are private individuals who are prepared to put their own money into startup or early-stage businesses in exchange for a share of the company’s equity (i.e. equity finance). Angels may invest on their own or as part of an angel network. Typically they are experienced entrepreneurs and, in addition to money, they bring their own skills, expertise and contacts to the table.

Business angels plug some of the funding gap that can exist between banks and venture capitalists, usually investing sums of between $90,000 and $900,000.

In contrast to venture capitalists, business angels are more inclined to invest in startups and early-stage businesses. They may also be more flexible in the way they finance a business because they will have a less rigid time frame for exiting a business (i.e. sale or IPO).

When it comes to the type of business they might invest in, angels and venture capitalists are similar. They look for business that that have good growth prospects –you’ve a greater chance of piquing their interest if your business occupies a niche market, has a new product or has a clear advantage over your competition. And you’ll need a good business plan.

From the perspective of your business, you’d benefit from the experience, skills and business contacts that you investor can share with you. Bear in mind your relationship with your investor will likely be close and personal – so you need to get along well and share goals.