When your business is in its early stages of growth, one of the most valuable assets you can possess is experience to navigate the tough times that all business owners go through at the beginning. However, for many business owners, experience is hard to come by when it is your first attempt at starting a business.

 

When you are looking for finance, and if you feel like some added experience in the management of your business could help you, then you should consider looking at Angel Networks as a source of finance for your business.

 

Angel Investors are individuals, and often successful business owners themselves, who look to invest in growing businesses in exchange for private equity in the business, and often a say in the running of the business itself. While it can be hard to relinquish some of your own business to an outsider, the experience an Angel Investor can bring to the table is invaluable.

 

Angel Networks are groups of these Angel Investors, and using an Angel Network is one of the most common ways start-up and early development companies raise finance, as the amount that Angel Investors offer is unlikely to be more than £100,000 in a single transaction, while a network can offer up to £1m or more, offering a great deal of variety as well as the experience that these investors offer.

 

As is the case whenever you apply for finance for your business, your business plan will be heavily scrutinised, and bear in mind that the people who will be looking at your business plan in the Angel Network have business experience themselves.

 

As they are looking to personally invest in your business, be as transparent as possible. It is better to show that there is room for improvement that the investor could see as potential areas to work on, rather than to hide elements of your business and have the investor find out at a later date.

 

The process of applying for finance from an Angel Network can take a number of months, taking to account the financial and legal analysis that is undertaken. Bear in mind that training is sometimes offered to prepare you for your pitch to the investors, which adds to the time.

 

As a result, Angel Networks are not necessarily a quick source of finance, but if successful, the long-term benefits to your business of receiving finance from Angel Networks can be large if you are looking for some added experience to your business.

 

Here at Informed Funding, we have a variety of Angel Networks as part of our own network that we can connect you with. Simply register and follow our 5 simple steps and see if Angel Networks are the right finance option for your business.

 

 

Need to know:

·      Under the regulation that governs angel investing, angels need to be either Self-Certified Sophisticated Investors or Self-Certified High Net Worth Individuals, as set out in the Annexe to the Financial Services and Markets Act, 2000.

·      Angel investors usually want to take advantage of tax incentives such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme and you should therefore determine whether your business is eligible for funding under these schemes before you approach potential angel investors. The regulations are available from the HMRC website.

·      It is a good idea to be frank from the outset with angel investors about any issues that make be uncovered during due diligence. Finding out later on about problems that weren’t mentioned at the outset can destroy trust and sour relationships.