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Could A Business Angel Make Your Financial Wishes Come True?
Finding finance of between £10,000 and £250,000 to fund the next stage in your company's growth can be surprisingly difficult. Banks will usually require security, and venture capital firms are often not interested in investing such relatively small amounts. So where else can you find the funding you need?
A business angel could be the answer. Business angels are wealthy individuals who provide equity investment in young, fast-growth companies typically ranging from £10,000 to £250,000. Angels can also offer more than just simple financial help. They have usually been highly successful in business themselves and come with a range of skills they can share, as well as access to useful networks and contacts.
What do businesses have to give to the angels in return? As well as a stake in the company in share terms - usually around 25-30 per cent - the firm must welcome involvement from the investor. This could range from a seat on the board, consultancy or part-time work to a less formal advisory role.
Business angels won't invest in all companies. They look for firms that can offer an average 20-30 per cent annual return over the investment term. They also often look for businesses located near them, in a sector in which they have experience.
If you are interested in seeking business angel investment, start by preparing a comprehensive business plan and financial forecasts. Put together a pitch explaining what your business does and the key factors to your success, how much money you are looking for and how the money will be used. Be prepared to answer difficult questions.
There are many sources of help and assistance. The National Association of Business Angels, as well as your bank or local Business Link may be able to provide a 'match-making' service to put you in touch with suitable interested investors.
Also, look through the business-to-business sections of newspapers. They often carry adverts from potential investors. Ask existing business contacts - as well as family and friends - if they know anyone looking to invest.
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