A business angel is someone who quite often has a background in business or finance, and has funds to invest in businesses.
Typically they take a share in the business in return for their investment, and because of this tend to take more interest in the business, often using their experience and expertise to enhance the success of the concern they have invested in.
If the company needs a multi million pound investment, business angels is not the way to go as their investments are usually in the hundreds of thousands due to the fact that quite often they will be involved in more than one venture.
More on angel investing:
- Why the rise of angels provides a halo for the VC industry
- Angel CoFund spreads its wings
- Attracting angel funding
Venture capital is finance provided for an equity stake in a potentially high growth company, and is behind some of the best know and most innovative businesses in the UK such as Pizza Express, Centre Parcs, Odeon, UCI cinemas and Spotify.
They tend to invest within three years of start up, in the early stage of development, and quite often choose areas such as:
- Clean technology
- Digital media
- Life sciences
Quite often, their investment is to fund the development of new products and technologies. As well as cash, they will invest their expertise in making sure the project succeeds. Look at the case studies on a corporate finance website and you will very quickly get an idea of whether they are a good fit for your company. Questions to ask are: Have they been successful in securing funding in your sector? Are the funding amounts they have secured on behalf of clients similar to the amount you are asking for?
In Northern Ireland try NI Business Info for funding information and in Scotland Scottish Enterprise and. In England a good starting point is your local regional development organisation.