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Business angel (BA) investment is a form of venture capital funding where private individuals invest in companies in exchange for a share of their equity. Most BAs invest between 拢10,000 and 拢500,000.

How BAs invest

BAs invest in start-ups or young businesses needing to fund activities such as product development or market expansion.

Many investments offer potentially high returns but also involve high risks. A BA investment can often result in the total loss of the amount invested, while other investments may provide a 10x + return depending on the success of the business.

This has led to the introduction of the and the EIS and SEIS are the two best tax schemes for investors in the world and they can dramatically reduce the risk involved for BAs.

BAs can make investment decisions quickly but will still need to see that you have a good business plan before they commit. Many specialise in particular industries, making them a potentially valuable source of expert knowledge and even mentoring.

Government match funding

The government provides some funds to match BA investments, such as those provided in Northern Ireland by techstart NI and Co-Fund NI ll.

•  provide funding 91香蕉黄色视频 for entrepreneurs, seed and early stage SMEs and university spin-outs
•   have an equity fund that co-invests alongside business angels and other private investors

The  operates on a similar basis to Co-Fund NI, where it will allow angels to complete a funding round. 

Finding a business angel

BAs may not make investments regularly and it could take you several months to find a suitable investor.

You can look for a BA through networks such as , and .

Before approaching a business angel (BA) for investment, you should consider whether other forms of finance could better meet your organisation's needs. For other sources of alternative funding, see equity finance.

Advantages of business angel financing

Six advantages of business angel investors:

• BAs are free to make investment decisions quickly
• no need for collateral ie personal assets
• access to your investor's sector knowledge and contacts
• better discipline due to outside scrutiny
• access to BA mentoring or management skills
• no repayments or interest

Disadvantages of business angel financing

Four disadvantages of business angel investors:

• not suitable for investments below 拢10,000 or more than 拢500,000
• takes longer to find a suitable angel investor
• giving up a share of your business
• less structural 91香蕉黄色视频 available from a BA than from an investing company

Venture capital funding

Venture capital companies make larger investments than BAs making them suitable for bigger companies with more complex plans.

The mindset of a VC is different to that of a BA. A VC is representing limited partners such as bank, insurance and pension funds and need to be aggressive in order to produce the best returns so they can raise their next fund.

They are likely to have a more formal relationship with the businesses they invest in and to build exit procedures into agreements. Due diligence for venture capital investments can also be more expensive for your business and take longer than with BA deal - see venture capital.

Before you apply for business angel (BA) investment, you should make a shortlist of potential investors you feel would be a good match with your company.

Making your business investment ready

Your business should be investment ready before you apply for funding. This means preparing a thoroughly researched business case, including a realistic valuation of your company's worth.

You should provide:

• audited accounts for the past two years
• evidence of current performance
• profit-and-loss forecast for next year
• business bank statements for the past six months
• profiles of each partner or director in your business

Pitching to business angels

Business angels are more likely to be interested in your proposal if they:

• understand the product or service
• have worked in the same industry
• are confident your business is well managed
• feel they can bring added value to your business
• are not being asked for a huge investment, or repeated investments

When pitching your business plan to a BA you should cover:

• the benefits they would gain by investing
• details of the investment required
• terms of the proposed deal - eg share of control, skills you offer and timescale of investment
• the ability of your management team to implement the plan

Read more on how to prepare your pitch to secure finance.

Finalising the BA investment deal

It can take several months to finalise BA deals legally and for funds to be transferred. You should also allow for additional finance to cover legal fees and bank charges.

Legal elements of BA deals include:

• shareholders' agreement - relationship between the shareholders
• subscription or investment agreement - terms of the share subscription
• service agreement - eg employment contracts with managers or directors
• other contracts - with more junior employees, suppliers, or customers
• disclosure letter - details of any warranties or assurances agreed between the parties
• memorandum - list of company's powers and the amount of share capital
• articles of association - company's internal regulations
• share options - eg giving tax-advantaged share options to new or existing employees under the government's Enterprise Management Incentive (EMI) scheme

For more information see secure equity investment.

You can find individual business angel (BA) investors, or syndicates, through BA networks in the UK and Europe. 

BA networks include:

• Halo Business Angel Network (HBAN)
• UK Business Angels Association (UKBAA)
• European Business Angel Network (EBAN)

BA networks help companies find an investor who is right for their funding needs. They also give investors details of companies they might want to invest in.

HBAN

HBAN is the all island representative body for business angels on the island of Ireland with a specific remit to establish business angel syndicates.

In addition to regional and sectoral syndicates, the network 91香蕉黄色视频s a number of all island vertical syndicates in the food and med tech space and hence companies in Northern Ireland can apply to pitch for funding to these networks.

Through HBAN 2.0, there is now a focus on the leverage of cutting-edge technology and end-to-end digitisation to streamline the investment process for angels and start-ups. Read more on .

Find out more about .

UKBAA

The UKBAA is a trade association for BA investors, promoting early stage investment in UK companies by bringing together investors and companies looking for funding.

BAs, venture capital networks, and associate organisations such as solicitors and accountants pay membership fees to join the BBAA but the service is free for companies seeking investment.

Find out more about .

EBAN

EBAN is the European Trade Association for BA investment and seed funds. The organisation comprises over 250 BA networks and around 20,000 individual investors.

The organisation offers membership packages to individual BAs, BA networks and other associated organisations.

Find out about .