Business Angels Funding

There are many ways to get finance for your business venture, from traditional bank loans to selling equity (shares) and venture capital. But getting finance is only one aspect of managing your business - once you have the finance in place you actually have to run and grow your venture, for a profit !

This could be where someone else can help you. Not just a standard consultant you may take your money and tell you what you already know, but a person who has a vested interest in your company as well. These are called "business angels"

Sound too good to be true? Well read on...

What is a business angel ?

Business angels have 2 traits:

• They are an expert in business growth
• They invest in your business

Good business angels will play an active part in growing your business because they actually have something at stake - ie: they have given you money for your business.

However, if this all sounds too good to be true, it might be.

Good business angels are hard to come by (there are many companies specialising in this area. Just check out Google.

Perhaps the biggest issue is they will take a high % of your company in exchange for cash.

Preparing for business angels

If you believe this is a good avenue to go down for your business then this is what you need to do.

1. Write your business plan - no one will see you without a business plan
   
   
2. Value your business - You need to put an honest value on your business (as the angel is looking for a stake in your company)
   
   
3. How much finance do you need - Very important - and not just how much you need but what you are going to do with it - all in your business plan.
   
   
4. The % of your company you're selling - again, be realistic - if you value your business at $1m and need $100k you won't get away with just providing 2% stake
   
   
5. Exit strategy - the business angel is not in your business for the long term - they want out within 18-24months and want to see a very high return for their investment. So how will you sell their stake, or your whole company ?

Questions to ask

It may seem a lot to prepare, but remember this is your business you want to grow. Other things to watch out for with business angels are:

Yes, they do want a fast exit, so be prepared for that


• Yes, they will want a high share of your business
  
  
• Ask yourself what will they bring to your business
  
  
• Ask the angel who exactly will be working with you (and can you get along with this person/ persons)

Also ensure that before any negotiations begin that you have a strict non disclosure agreement (NDA) in place as you don't want them stealing your ideas.. do you ?