Private investments can help accelerate the project’s development but can lead to complications through the human factor. So, how to find an angel in the UK?
The role of angel investors
Business angels are usually wealthy persons with extensive experience who, for various reasons, invest their free money and expertise in the business ideas of beginners, especially in innovation. A typical volume of investments in a startup is $ 50-300 thousand. It is necessary to reckon with a high level of risk since new markets do not have enough risk statistics. In addition, due to limited funds, the investor cannot provide high diversification. Contracts with the founders of companies in many aspects are informal, making it difficult to control the business. They usually simultaneously engage in many projects, as most of them will crash, and only one of many will bring a profit that can recoup other losses. Among the characteristics of an angel investor, there are:
- He seeks to be present in business centers to contact innovative professionals who need funding for their startups. Such companies are characterized by promising exponential growth if they are thriving.
- They not only borrow money but also participate in the project that funds. In some cases, they offer their business knowledge. Thus, they help with decision-making and share their experience and professional contacts.
- They estimate the payback rate of investments and the ability and dedication of the entrepreneur.
- Unlike what is happening to the venture capital fund, wealth management was not delegated to a third party. The investor angel disposes of his own money and decides where to put them.
- The capital investor-angel is usually rewarded with a fraction in the startup.
- They are usually combined in a network of clubs organized by state or private structures – for example, universities or training centers, higher.
- They are a secondary source of funding. Entrepreneurs turn to them after tapping at the door of families, friends, and professional contacts.
Angels in the UK, as a rule, invest their funds, in contrast, to venture capitalists who manage the money of third parties united in venture funds. A small but growing number of business angels form networks or groups to participate in the search for investment objects jointly and to combine capital.
How to find angel investors in the UK?
Let’s take a closer look at how to find a business angel in the modern world. There is the following algorithm:
- Make a list of all available business angels. It is necessary to investigate ratings, media publications, and acquaintances’ stories.
- To update the list. It is necessary to pay attention to when the angel last invested. If he did not have agreements during the year, it might be a sign that he was disappointed in the processes in the venture market or he had ended money.
- Explore the angels that supported businesses similar to yours. If the investor puts money into similar projects, it is a good sign. Please note that it is a similar project, not a direct competitor.
- Arrange the list of investors by priority. First of all, you need to meet with those that do not fit you. Then, at the time of meeting with those angels that are most appropriate, you will be ready to perform well.
- Look for exit on business angels. Find those who will help you get acquainted with business angels and present you. Spending time understanding who has already been established in the market can support.
- Find an individual approach. Appeal to a business angel should be personal.