Generally, Business Angels are entrepreneurs with an extensive experience in small business management and that have financial means to invest. Their capital (usually from the sale of their own business) is used to invest in emerging companies that are still being created/initiating. This type of funding is a very good opportunity for entrepreneurs with innovative business ventures of growth potential. It is important to refer that this type of financing source usually means a partnership in the business management, which might represent an important advantage for entrepreneurs with little business experience.
Usually, Business Angels are individual’s risk capital to cover financing needs in situations where institutional venture capital does not meet the particular projects in the initial phase, commonly known as start-ups. The reasons they seek to, also reflects their profiles: as investors a Business Angel aims to achieve an added value over the medium term, at the time of sale or entry into a company’s stock market.
Additionally, it should be noted that these investors usually do not have only capital to invest but also expertise in a given sector as well as professional contacts, which is very important in starting/growing up a business. However this investor type usually prefers to deal with high potential businesses, where there is a greater possibility of competitive advantage.
- It can be a very quick financing
- Access to mentoring or management skills and expertise in a given sector as well as professional contacts
- No need for collateral
- No repayments or interest
- Giving up a share of the business
- Takes longer to find a suitable investor
- Case study about Business Angels – http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075062298&r.i=1087198064&r.l1=1073858790&r.l2=1084705429&r.l3=1074453334&r.l4=1087197738&r.s=sc&r.t=RESOURCES&type=CASE%20STUDIES
- Introduction to business angels and business angels network activities in Europe – http://www.eban.org/interactive/share-a-document/doc_download/58-ebantookkit-2009