Business Angles are either private investors or syndicated groups of investors that provide equity funding for business opportunities. Like the Dragon’s Den on television Business Angels not only provide finance by investing in the business but also usually offer skills, contact and business advice.  You may pay the Business Angle in cash, or share options based on the amount of money invested.

As Business Angels are taking a risk the business itself needs to have certain characteristics. Firstly the company will need to be borrowing a relatively modest amount of capital (say, between £10,000 to £250,000) and is willing to part with company share in return. If more capital is needed then Venture Capital Companies would need to be approached. Secondly, the owners and senior managers of the business must be prepared to build up a relationship with the business angel- they will usually want some close involvement in the business without wanting a day to day management oversight. They could well offer expertise to the business say, in marketing. Crucially the business angel will want a high return for the capital – up to 20% to 30% per years which may well be realised by the gain in capital value of the company over the period. However, business angels even if they have no time-related issues for investing their money will need to know there are plans for an exit strategy. This may take the form of the sale of the business to another business, the re-purchasing of the angel’s shares by the management or by another individual.