It’s always a challenge to access funding for a business. There are so many choices available and it may be difficult to pinpoint the right option for you. Sometimes, it’s best to take the roads less travelled and try less popular routes. Business angels are a good option to try because there are many advantages associated with obtaining funding from them. Look at the reasons.
Who Are Business Angels
Business angels are wealthy investors who have extensive experience running businesses. They come with a wealth of contacts, expertise and knowledge. They operate by asking for a share of your business start-up and they will provide the necessary funding. They will also make decisions about their investment.
What Do They Bring
Some business angels might invest and some might lend anything between £10 000 to £250 000. If you’ve a group of angels investing together, there is a lead angel who checks out the information about your company on behalf of the group and the rest follow the lead angel. An angel will sit on your board to help make key decisions and provide strategic input.
The angel’s contacts and experience will be a big incentive to your company. It’s a good strategy to have angels on your team because it can open doors you could never have accessed but their ambition and drive to succeed will encourage you to succeed. Although you give up a few shares, you won’t have to worry about repaying loans and the likes on a monthly basis.
How Can You Find an Angel
You can find a business angel by looking them up on the internet or tracking them down via business angel networks and syndicates. You can also track them down by doing a free search on the UK British Angel Association [UKBAA] website where you can find more information about them. You’ll need to forward a brief executive summary so that they can help you locate the right angel from their database. You are also advised to do your research to understand who the angel is, their track-record and such information.
What Will Angels Want To See
Business angels will want to see a business plan. They need to understand what you’re doing and check out the management of the company. An angel will need to determine the skill set of the management team and ensure he has trust in you. If he doesn’t have any trust and confidence in individuals or the team, he won’t get involved.
An angel will want to see your business model and make sure he understands it, it’s solid, sound and whether you’re onto a good thing or not. An angel needs to be sure that you haven’t got it completely wrong. Going forward, an angel will have to review good and regular information on such things as performance, statistics, profit, cash flows, etc.
Match Made In Heaven
Develop your proposition and talk to UKBAA to match you up with the right angel. Alternatively, you can search their online directory to find an angel networks or groups that you think you can work with and send them your proposition. Make sure you know how much funding you need to get your business running and the parts of the country you’re thinking of targeting. Take professional advice. Most people don’t take debt and investment into a company so get the right advice from a good solicitor.
The Alternative Funding Option
For business that don’t want to lose part of their business permanently or go through the elongated process of access funds from an angel investor that wants more influence than you are comfortable with giving, a business cash advance is the preferred option. A business cash advance (like those provided by Liberis), is a different kind of investment that is linked to the amount of business your business does in any given month and repaying the investment can take as long as you wan. This is because your business will only repay a percentage of your takings and the total amount repaid will never increase regardless of how long you take to repay the investment.
Karen Underwood is a business consultant who regularly helps small businesses raise funding from providers such as Liberis.co.uk