Who Business Angels are? | How to find one? | What to look for in one? | How to become one?
Do you have an Innovative Business Idea?
Are you looking for investment?
Business Angels can turn your Business Idea into a Reality.
Business Angels – Just Who Are These Angels?
If your idea of a business angel would be that of a seraph who has come down from heaven in order to carry out business with you, you wouldn’t be too far from the truth…well, at least not too much in the figurative sense!
That said, from a proper business lexicon perspective, business angels are essentially individual entities or groups of entities who invest in businesses that are either already witnessing immense growth or are likely to do so.
For this angelic gesture, these business angels usually expect a stake in that business in the form of equity.
Besides monetary contributions, most business angels also make their own skill sets and overall broad range experiences available to the business. Considering the amount of networking that business angels usually indulge in, they also bring to the table, a veritable range of contacts, across various industries and segments.
Business angels are largely seen to be investing in businesses which have the following set of characteristics:
- The business in question has witnessed significant growth and expansion within a very reasonable time frame.
- The business is in a particular industry or sector that happens to be a focus area of the angel investor. Additionally, the sector in which the business angel is looking to invest may itself be witnessing robust growth on the whole.
- Business angels perceive the business to be one which has immense potential, and one in which they foresee very high returns.
In light of the last mentioned point, business angels are often excited by radical business ideas in industries hitherto untouched by them. Therefore, the bit about these angels sticking to their focus areas alone may not be entirely true under all circumstances. Essentially, if it is a business idea for something that has probably never been done or even conceived of before, you can be reasonably certain that you would have got the business angel’s attention! This is because the business angel also knows that if the idea really takes off, the returns to be made on the investment would be truly phenomenal.
So, what else do you need apart from a radical business idea to catch the attention of a business angel? Well, quite a lot, starting with a sound business plan. And what would be a ‘sound’ business plan?
Well, essentially a business plan that has given adequate forethought to aspects such as market scenario, competitive landscaping, projected revenues, business location, growth projections, business vision, management structure among others. With a sound business plan, you can be reasonably assured of getting to a stage where receiving funding from the angel in question would be likely. Therefore, make sure that you not only have the detailed business plan ready, you also have a suitable summary of it prepared, which is what a busy business angel is likely to have time for, to hear.
Finding Business Angels
This might just be the toughest part of the entire exercise of obtaining business funding through a business angel. One of the reasons behind the relative obscurity of business angels is the deluge of business plans that they have to contend with at every step. Practically every person who knows about or happens to come across these business angels wants to showcase his “million pound idea” to them and the avoidance of such constant bombardment of business plans is what leads them to a life of relative recluse.
That said, if you are really very sure of your business plan, and have identified a particular business angel who you think will be all fired up by your one-in-a-million business idea, chances are good that with persistence, you would be able to get to meet and present your business idea to the angel. An introduction through an acquaintance of the angel, or by a fellow industry associate would definitely help your cause in a big way. Additionally, seeking prior appointment would ensure you do not meet with the angel at a time when the person is pressed for time, or unable to give you attention.
In Britain, business angel associations like the BBAA or British Business Angels Association, would be a great starting point to find a suitable business angel for your business idea. Moreover, if you have been tracking deals struck by other businesses with these business angels, you would be reasonably well aware of the perfect business angel who would suit your requirement and likely fund your venture.
In addition, there are many platforms, both online and offline, which work towards bringing businesses and angel investors together, so make sure that you look them up.
What to look for in a Business Angel?
Once you manage the tough part of actually finding a business angel, apart from the obvious funding that you seek from the person, you would ideally prefer less interference in everyday operations of your business. Therefore, you would like a business angel who would let you manage your business the way you want to – the way you have been running it so far. Business angels have this tendency to up the ante of their interference whenever they see the business not performing as well as they had expected it to, so you as the owner need to be extra watchful at such times, in case the interference of the business angel increases beyond acceptability.
That said, you would definitely like a business angel who brings to the fore a huge network of business contacts who would come handy to your business and facilitate its growth and expansion. You would also like a business angel who has enough practical or theoretical experience of the business, and would thus be able to share nuggets of his wisdom with you.
Becoming a Business Angel
If you would like to be on the side of the angels themselves, obviously you would need the necessary financial backing along with a very strong business acumen as well as a pulse on industry trends. While business angels also get their predictions wrong, it would be your endeavour to maximize the investments that bear fruit thick and fast while minimizing the sitting ducks. Networking with other business angels as well as getting empanelled on various angel investor groups or forums would also do your prospects of becoming a business angel yourself, a world of good.