With many companies making staff redundant, many people are considering setting up their own businesses. However in the current economic climate, it can be difficult to access funding from banks and some new business owners are looking for more than just a loan, they are looking for experienced entrepreneurs to help them get their fledgling companies off the ground.

Business Angels can be the answer. Business angels tend to be entrepreneurs or retired executives who are actively looking to back new companies.

Business Angels will use their own cash and resources to invest into companies – whether the companies are start-ups or established businesses that need a cash injection, perhaps for expansion purposes. Business Angels are good for small cash injections, normally up to around £50,000 although it will depend from angel to angel, and can make very quick decisions whereas Venture Capital firms may take a lot longer to come to a decision and require a lot more extra information.

There are no ‘typical’ sectors that Business Angels will invest in – different angels tend to have their own specialities and interests and thus will tend to invest in particular areas. However they will tend to look for businesses with growth potential and not just lifestyle business that are designed just to provide a nice living for the owner. Businesses with a unique selling point or a competitive edge are the most likely to be successful when looking for business angel funding.

The angel will put some cash into the business for a stake in the company along with some idea of when their invested cash is projected to be returned to them. Business Angels typically also want a say in how the company is run with some hands-on involvement. Because they tend to have a lot of business experience behind them, their advice and experience can be invaluable – and sometimes more valuable than the cash they provide.

You might also be interested in reading our free Guide to Financing Your Business

Popularity: 5% [?]