Experince of Business Angels
Discussion
About 6 or 7 years ago I had talks with a group of Business Angels about investing into a business I was involved with, they weren't risk averse and had the skill set to hand that the business needed. However we weren't able to to a deal on the right terms for anyone so it fell apart quite quickly - having taken months to get to that point.
It's a long, hard slog to find the right ones and get working with them. Chances of even finding the right one are pretty low TBH. However, it is a long way from impossible, very rewarding and I would suggest that many are more than happy to go with fairly high risk. They tend to want something that will make money of course but something they can bring their own expertise into as well.
Worked with both individuals and networks a lot over the past 3 or four years and all in all, I have found it a lot of fun. Very hard work but learnt a lot.
Worked with both individuals and networks a lot over the past 3 or four years and all in all, I have found it a lot of fun. Very hard work but learnt a lot.
Depends on the product, the management team, the amount of funding required, which round of funding this is, the terms on offer etc.
As a general rule, contact as many as you can but remember that most will only give you one brief hearing, be that via a submission or a direct conversation. If you don't get their interest first time it is a nightmare to re-visit them later. Any investor will have a load of questions from the first approach but if you don't get the right ones excited on day one then making subsequant approaches is often rather difficult.
As a general rule, contact as many as you can but remember that most will only give you one brief hearing, be that via a submission or a direct conversation. If you don't get their interest first time it is a nightmare to re-visit them later. Any investor will have a load of questions from the first approach but if you don't get the right ones excited on day one then making subsequant approaches is often rather difficult.
pappa lurve said:
It's a long, hard slog to find the right ones and get working with them. Chances of even finding the right one are pretty low TBH. However, it is a long way from impossible, very rewarding and I would suggest that many are more than happy to go with fairly high risk. They tend to want something that will make money of course but something they can bring their own expertise into as well.
Worked with both individuals and networks a lot over the past 3 or four years and all in all, I have found it a lot of fun. Very hard work but learnt a lot.
Worked with both individuals and networks a lot over the past 3 or four years and all in all, I have found it a lot of fun. Very hard work but learnt a lot.
Agreed.
The motive of a business angel though (or at least the huge majority) is to get as much payback as they can as soon as possilbe. As soon as the benifit of their cash and input has expired, their plan is to sell. That means that although your business may be your pension and are quite happy to run it for the next 40 years, they are looking to take your company, add value with thier cash with a view of an 'exit strategy' in two to four years.
Of course that means that their input will be based around these motives not yours. If you *need* someones expertise and are looking for an 'exit' yourself it can be an excellent opportunity, but if not you are handing over a good chuck of the ownership of your country which will be very difficult and expensive to reclaim.
justinp1 said:
If you *need* someones expertise and are looking for an 'exit' yourself it can be an excellent opportunity, but if not you are handing over a good chuck of the ownership of your country which will be very difficult and expensive to reclaim.
What do you do when you're not buying stereos Nick? Finance revolutions?
I have invested in a number of opportunities so can perhaps comment from a slightly different view
In defense of the BA – most entrepreneurs forget for every one successful business a BA invests in he may have lost money on another three. Therefore he /she needs to make a fantastic return on the good ones to offset the ones that perform badly.
Personally I expect a 100% return for every year my money is locked in and are happy to wait 3,5 or even 10 years. May sound excessive however if you assume £400k invested in 4 different companies over 4 years. One returns your money, on two you lose everything and the fourth makes you £400k profit (if you are very very lucky) . So after investing £400k for 4 years you get £200k profit - or about 12.5% (annualized) doesn’t sound too great now???
A good BA (with industry experience) can transform a business, a friend just took a small stake in a co and through his contacts won them a new contract – pretty much doubling their profitably.
Lastly it makes a big difference (well at least to me) which are type of organisation I invest in e.g. retailer, service, manufacturing – the government EIS is a great tool for mitigating some of the risks for a BA but only applies to certain sectors.
Cheers and good luck
PS to find Business angels try this site
www.angelinvestmentnetwork.co.uk/home
In defense of the BA – most entrepreneurs forget for every one successful business a BA invests in he may have lost money on another three. Therefore he /she needs to make a fantastic return on the good ones to offset the ones that perform badly.
Personally I expect a 100% return for every year my money is locked in and are happy to wait 3,5 or even 10 years. May sound excessive however if you assume £400k invested in 4 different companies over 4 years. One returns your money, on two you lose everything and the fourth makes you £400k profit (if you are very very lucky) . So after investing £400k for 4 years you get £200k profit - or about 12.5% (annualized) doesn’t sound too great now???
A good BA (with industry experience) can transform a business, a friend just took a small stake in a co and through his contacts won them a new contract – pretty much doubling their profitably.
Lastly it makes a big difference (well at least to me) which are type of organisation I invest in e.g. retailer, service, manufacturing – the government EIS is a great tool for mitigating some of the risks for a BA but only applies to certain sectors.
Cheers and good luck
PS to find Business angels try this site
www.angelinvestmentnetwork.co.uk/home
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