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Accessing Angel Finance
There are a number of ways that you can access angel investment. Angels frequently invest through organised networks and formal syndicates, or they may invest on their own or with a number of fellow investors on a deal by deal basis. Angels may also be accessed through accelerator programmes or incubators. In most cases angels like to invest through meeting entrepreneurs at live pitching events, or showcasing events. However there are a number of online platforms where investors sign up to find entrepreneurs looking for finance.
In all cases you need to ensure that you are presenting your business plan and investment proposition to investors that are either high net worth or sophisticated ie that the individual has the spare financial capacity, but has business or financial experience and understands the investment process. Click here for details of Self Certification for high net worth or sophisticated investors.
Accessing Investment through a Business Angel Network
Business Angel Networks, generally run on a not for profit basis, some with a geographical focus and some with a specific sector focus and generally bring together a group of about 50 to 200 business angels who become members of that network. Business Angel networks usually have a ‘gatekeeper’ that selects the initial deals and presents them to the investor network members.
The Gatekeeper who is an experienced individual receives often around 500-1000 business plans per year; assesses an filters these down, generally meeting around 150-200 entrepreneurs, and subsequently decides which propositions should be presented to the investors, but does not get engaged in the deal process or give investment advice.
Business Angel networks run a regular programme of pitching events where the investors can see the selected business propositions and where the entrepreneurs have receive advice and support with preparing their pitch. These events offer an opportunity to see pitches, meet and talk to the entrepreneurs and interact with fellow investors Investor members can then decide if they wish to invest either alone within the network or as part of a syndicate of high net worth/sophisticated individuals taking their own individual decision.
There are many angel networks operating around the UK, many of these are members of the UK Business Angels Association. Click here for our directory of members and services for information on Angel networks in your area and to find out more about their activities, pitching events and membership fees.
Accessing Angel Syndicates
Many angel investors prefer to invest in small groups or syndicates. By investing alongside others the angels are spreading their monetary risk. This brings not only the opportunity to access a greater pool of money than might normally be raised from an individual angel, you will also be able to access a range of experience, knowledge and contacts that can bring real added value to your business.
A syndicate normally comprises of at least three investors who are investing together. There are different approaches to syndication:
Syndication on a deal-by-deal basis.
Angels may form a syndicate on deal be deal basis. Or they may regularly invest together and have a formal structure. Normally, the syndicate or group would identify a Lead angel who acts as the interface with the entrepreneur/management team in co-ordinating the due diligence and agreeing the final negotiations and would then generally act for the syndicate in following the deal. However they will each sign the term sheet and other legal documents and subscribe to the shares as an individual investor, responsible for your own investment decision. Click here for more information on syndication.
Potential costs of accessing angel finance
Going through a business angel network, gives you access to a large group of angels. If selected to pitch you will have the opportunity to access dedicated advice and support with investment preparation how to interface with investors and pitch preparation training as well as opportunity to make a presentation tat a company presentation event o an extensive group of the investor members, opportunity to present a copy your business plans and for more detailed discussions as well as some post pitch support. Networks can charge between £250 and £750 depending on the stage of your business. For details of costs charged see the individual networks featured on the searchable Member Directory.
There are also free events where you can meet investors and make a short pitch without any training, advice or pitch preparation.
Building up your Investment Package
Depending on the amount of finance you need, you may need to approach a number of different angel networks or syndicates to access the level of investment you require. This could also include Co-investment funds such as the Angel CoFund and early stage VC funds willing to co-invest alongside angel investors. For further information on early stage VC Funds, visit the Member Directory.