Who Are Business Angels?

Business Angels are people who like to invest in struggling businesses which they think have a good chance of making it in the business with some financial backing as well as businesses that are just starting up. These businesses will need help financially to start-up with the purchase of stock and equipment.

Business Angels usually come from an entrepreneurial background and therefore know the troubles you may go through and that finance is one of the most important factors in any start-up business and especially in a business that is struggling financially. A Business Angel will usually only offer financial backing if they think your business stands a good chance of succeeding.

The amount of finance they offer you depends on the business plan you put forward. They will need to see every little detail of your business from who your suppliers are and how much they charge to how much you offer a product or service at. They will want to see all your ingoing’s and outgoings for the last year if your business is struggling. If it’s a new business venture you’re trying to gain finance for, you will need a good plan showing the revenue of the business over the next few years as you see it.

A Business Angel can offer from £10,000 to £75,000 to help regenerate your business or get your business off the ground. Some Business Angels may be willing to work as an Angel Syndicate and can then offer from £100,000 to £250,000. The average amount a Business Angels invests in a company is around £75,000. All Business Angels want a good return on their investment and this is often done by their high percentage share of your business which they get back at a much higher price in a few years.

There is a difference between Business Angels and Venture Capitalists this is that Business Angels take less control of your business they don’t usually want the bother of a director’s or management job and would rather invest in your business and give you some advice if you need it. Due to this, their investment decisions are usually a lot quicker than Venture Capitalists.

Whoever you get investment from whether it be a bank, a loan company or a business angel you will need a well planned and thorough business plan. Your business plan will show what your intended goals are and any ideas you have for the future as well as the planned income of the business for the first few years. Every business plan should be regularly updated to keep up to date any changes with the business internally or externally and also any new pointers you’ve put in place.

Not only will you use your business plan to help secure business finance from a Business Angels but also it will help you run your business more effectively and efficiently. So why wait if you’re looking to raise finance for your start-up or struggling business contact a Business Angel today for financial help and advice.

Business Angels Taking The Risk

When you’re building a new business, or looking to expand your old one, the first thing you’ll always need is money. Money doesn’t just grease the wheels of business, as the old adage goes – money is the wheels of business. Everything in business depends on it, and if you can’t get funding, your business plans will never even get out of the starting gate. So, what do you look for in an investor? Some investors, called venture capitalists, represent large bases of other investors and, as such, are spending their money on your project, much the way a stockbroker or investing firm works.

On the other hand, there also exists a kind of investor who invests his or her own money in starting companies. They’re taking a risk, and are often careful where they invest, but they do invest somewhere – and with the right sales pitch, that somewhere could be your company. These investors are called business angels, and work either singly or in pools of capital. They may invest now, while shares are cheap; wait a few years for your company to mature, and then sell to other stockbrokers or back to you, if you’ve made enough profit.

The problem, of course, is that business angels are investing their own capital. No one, as they say, is more careful than a man spending his own money – business angels will be very careful where and what they invest in, so you’ll have to have a bulletproof sales pitch, if you expect to succeed and get the funds you need. A key here is preparation. Before your first meeting with your investors, make sure you know everything there is to know about your company, your market, your target audience, and your locale – nothing impresses people more than a ready answer for every question and plenty of hard evidence.

Also, make sure you have a good, clear business plan. Know how many people will be on your payroll, what equipment you’ll need to buy, what office space you’ll be renting, and how all these expenses translate into profits at the end of the year. Without a clear idea of how you’re going to make money, investors will be reluctant at best. Know the means by which you’ll get your cash, and you’ll better be able to predict the results to others.

Prepare for questions before you go into the meeting. Think about what you might ask if you were in the investor’s position. Questions like “how much do you expect to make the first year,” and “how do you expect profits to rise over the next decade,” are to be expected, as well as other questions more tailored to your specific situation. Know your unique selling points – what makes you stand out from the crowd? Why should the investor choose to give money to you instead of the next guy or the next girl in line outside the investor’s office? Show them you’re unique, and you’ll de facto eliminate the competition.

Much of the way these meetings is entirely psychological. Make sure you yourself are confident in voice and posture. Know you can make money and you’ll be much more confident when you make that claim to an investor. A straight back and a strong voice do wonders and can often be even more effective than strong logical arguments for what you say.

Make sure you’re committed as well. If you haven’t invested as much of your own money as possible, investors will suspect you of scamming or of not trusting your own company. If you’re heavily invested in your company with both time and money, investors will be more likely to believe your commitment to its successful completion.

Business Angels For Your Startup Business

Setting up a new business can be a daunting prospect. There’s the possibility of failure, and with it, the risk of losing the money you’ve invested in your company, as well as seeing all your months or even years of hard work go to waste. But, there’s truth in the old saying, “nothing ventured, nothing gained.” The biggest rewards accrue to those who not only have a vision for their business, but also are prepared to see it through and have the courage of their convictions.

Nonetheless, it can be hard finding sources of funding for a new business. In many cases, finding a business angel may be your best bet for sourcing capital to start up a new company. But, let’s have a look at some of the other options available to you.

First and most obvious, you may have the available funds yourself. Depending on the level of risk, you may not feel comfortable dipping into your savings to fund a new business; this is a decision you will have to consider long and hard. However, if you feel able to use some of your savings to finance a startup, then so much the better.

Another option is to borrow money from family or friends. If you’re doing this, the best and fairest way to get them on board is as investors, making sure that they have the chance to share in your success – but also warning them of the potential pitfalls. Make sure they are clear on the nature of the risk they are undertaking – many friendships have been broken down the years due to money. It’s often a good idea to put your agreement in writing, just so there is absolutely no misunderstanding further down the line about the terms on which you borrowed the money. It’s up to you to be honest about your chances of success and to give them all the information they need.

The second major type of financing is acquired by taking out a standard loan. This may be from your bank or another lender, and can include bank loans, overdraft facilities, or credit cards. Taking out one or several loans is not a bad idea, but you must make sure you’re not taking on more debt than you can afford to repay.

Take a careful look at repayment terms and interest rates, and make sure you’re getting the best possible deal before signing anything. Even if your fledgling business is doing well, excessive loan repayments can be a heavy drag on your profits, so do the sums beforehand, and make sure you can afford to repay the debt even in a worst-case scenario. You might also want to think about remortgaging your house, or other investment properties you may own. The same rules apply; make sure you don’t take on more debt than you can afford to repay. Taking out a large loan or remortgage can force you to make an honest appraisal of your business plan; sometimes it can be just the reality check you need.

If you don’t have any equity with which to take out a loan, then there is another option, called the Small Business Loan Guarantee scheme; it’s a business loan 75% guaranteed by the Government. You are required to contribute just 25% of the security, so this is an excellent option for anyone who doesn’t have a huge amount of capital with which to set up their small business. However, it’s worth noting that these loans do have an administration fee attached, and the rate of interest is normally relatively high – some 1.5 to 2.0% higher than base rate.

Business Angels Vs Venture Capitalists

Have you these amazing ideas which you’re sure you can put into practise and make a living out of your ideas. If so you’re more than likely looking into financial help to put these ideas into practise. You may think bank loans, credit cards and loans off family and friends are the only options but Business Angels and Venture Capitalists are also a good option to consider.

Business Angels what are they you may ask, they often work as individuals who themselves are entrepreneurs and have made their dream come true in whatever business sector they chose. They have now have the experience and financial backing to help other entrepreneurs to start their own business just like themselves years ago.

Venture Capitalists are very similar to Business Angels they are often from an entrepreneur background have made a successful business and now would like to give back to other entrepreneurs and help them with finance for their new start-up business.

So you’re asking what is the difference between them both, they are:

Business Angels – Give you the financial help you need when you need it, and invest their own money in your business. If a business angel works within an angel network the angels will pool together with their investment as well as sharing research they each do. Angels understand the needs of a new business as they have been there themselves and therefore they not only offer financial help but they can offer good advice when no one else will.

Venture Capitalists – Give you the financial help you require when you need it but uses pooled money the venture capitalist and others have in a professionally managed fund. Venture Capitalists like to take an active role in the business they are investing usually being a director or on the management board of the business.

So if you’re looking for some financial help for your new start-up business or even your struggling business you don’t just have the options of:

• Family

• Friends

• Banks

• Loans

• Credit Cards

You have the option of using a Business Angel or a Venture Capitalist. Which ever one you decide to use the only way you’re going to show your serious in wanting their help is to have a well planned and thorough business plan.

A business plan will not only be used to show your investor what you planned ideas are and your predicted returns in the next few years will be it will also be used for you to run your business well. Your business plan will show others what your initial goals were and if you succeeded in these as well as any risks you planned for and if any of these actually occurred and if they did, did you cope ok with rectifying the risk.

Your business plan shouldn’t just be placed in a drawer and forgotten about it should be regularly updated. Your business will continue to change and usually out of your control and you should reflect on these changes within your business plan. You should have contingency plans to deal with any external influences that would affect your business and the way in which you run it.

You should now be a little wiser of the facts of the difference between Business Angels and Venture Capitalists and how they can help you.