Business angels

Going to a business angel is one option if you are looking at equity finance. This guide should give you a better understanding of who business angels are and what they offer.

Who business angels are

  • Business angels are usually wealthy entrepreneurs looking to invest in growth businesses in return for equity
  • Angels will consider the characteristics and growth potential of the market you are in
  • They will look at the expertise and track record of your management team
  • They might visit your business and carry out their own due diligence before investing and look to make an exit after a set period - usually between three to five years.
  • They will look for growth in their capital of at least 25% a year.
  • You can find the most extensive database of angel networks plus more information on the British Business Angels Association website

What they offer

  • Business angels bring in finance to help your growth
  • They are looking for a good return and will take a high risk if necessary
  • They make a quick decision on whether to invest or not
  • They will wish to become closely involved with your business and play a part in the direction
  • They will have local knowledge and know how small businesses work
  • They can help with
    • contract negotiations and management advice
    • financial advice
    • strategic guidance
    • recruitment management
    • business contacts
    • market information
  • They cost less than other forms of equity finance such as venture capitalists
  • Get to know the angel: the personal relationship is just as important as the business relationship

What you could be giving up

  • Over 90% of approaches to business angels for investment are rejected at the initial stage of seeing a company's business plan
  • Angels do not make regular investments and as such it can be difficult to find one willing to invest
  • The months-long process is time taken out of your business
  • Business angels will want to be closely involved with your business strategy and will expect to see regular financial reports and accounts
  • They may look for certain requirements such as stronger voting rights and preferential dividends.
  • Funds will come in a lump or your business will have to meet certain targets such as revenue levels


  • Determine how much money you need; then assess whether you are willing to give up a stake in your business and some of the future profits
  • Make sure the plans you have for your business are realistic
  • Determine how a business angel would work with your company and what decisions they would have a say on
  • Ensure the skills of the angel meet your business needs
  • Prepare your business plans and pitch with the interests of the angel in mind
  • If you are going forward for equity investment, it is a good idea to seek advice from a business adviser and a lawyer


Where can I find investors?
Networking is a good way to find potential investors: attend events sponsored by your local Business Link and chamber of commerce. Speak to friends and business associates about your venture, too - word of mouth can spark investors' interest and create a buzz around your company. Associations such as the British Business Angels Association can help connect you with interested parties.

Jargon buster

Risk capital: another term for equity investment


Smarta Business Builder

To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website BuilderBusiness PlansAccounting SoftwareLegal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.


We use cookies to create the most secure and effective website possible for our customers. Full details can be found here