What do Business Angels do and why are they called Angels? It’s someone who puts his or her money into a venture in return usually for equity. The term angel originated in the Broadway Theatre, from the financial supporters of productions. I was one of the founder directors of Dorset Business Angels (DBA), supporting Steve Berry our founding Chairman in 2012/13. We are part of UK Business Angels Association UKBAA The UK Business Angels Association (UKBAA) is the national trade association representing angel and early stage investment. I have raised money from business angels, pitching for funds. I have also invested in businesses as a business angel. Dorset Business Angels has won awards from UKBAA as Best New Angel Network 2013. We raise hundreds of thousands of pounds for new businesses. We run investors’ dinner pitch events quarterly and Angel Conferences in Bournemouth every two years.
What do Angels Do?
A business angel is typically a successful entrepreneur or professional who puts their own money into a startup or early revenue business in return for equity. They are normally used to handling the commercial challenges which the younger businesses are likely to experience. There are now two types of investor. These are defined by the Financial Conduct Authority (FCA), the financial regulatory body in the United Kingdom, but operates independently of the UK government. High Net Worth (HNW) investors and Sophisticated investors. Both categories of investor are described on our DBA About Us page.
The Process – before our event
Entrepreneurs and people with ideas submit them to DBA. We select the most viable and then these pitch at our Investors’ Dinner pitch events. We are not a training, pitch preparation or business development organisation. We have some excellent partners we point young businesses to for help such as Dorset Growth Hub, Silicon South and the Economic Development Managers in the local Councils.
What Angels Look For
At one of our events or any angel event, typically angels tend to invest in areas where they have expertise. So, an angel with a background in maritime engineering for example would be more comfortable looking for investments in this sector. Similarly, an investor with expertise in Software as a Service SaaS would focus on this. It is not always the case. Here is a nice video. The Top 3 Qualities Angel Investors Look for in Entrepreneurs. Ryan Scott is Founder & CEO of Causecast. What do I look for in an entrepreneur? He is looking for three things. 1. A business that is a game-changer 2. Persistence 3. Focus on mission not mechanics. If you come to one of our events, you see a mixture of this reflected with the investors. Sure, they want a great idea, they want Intellectual Property ideally but, what is critical is a great management team, and fundamentally a driving leader.
Why Successful Angel Investing Is Fun
After businesses have given their presentation pitch, at DBA, our Chairman Don McQueen chairs a discussion with investors to see what people think. This is critical. Why?
- open discussion allows investors to better understand the opportunity
- experts on the sector can provide insights into the opportunities and risks
- people can give views such as:
- quality of the leader
- quality of the idea
- competitors in the field
- financial robustness of the proposition
- is it a good deal!! ROI is critical….
- does the pitch stand up? is it truthful? factual?
Just a few of the points the come out in this fascinating session. After which it is about, “is anyone interested in looking further into this business?”
After Events and Due Diligence
At DBA we circulate information on presentations online, via social media and through our new Newsletter. For investors keen on pursuing interest in businesses, the story has only just begun. Don McQueen, our Chairman will run through this at our October 27th Conference this year.
- Non-Disclosure Agreements NDAs
- Company Valuation
- Investment levels – what is being invested for what equity
- Any board roles for investors
- Any changes to management team agreed
- The business plan – any issues, financial, IP, marketing and so on
So, when asked, What do Business Angels do and why are they called Angels? Colleagues in the professional services get nervous if I include in my reply anything about angel investing “being fun”, because they are so used to working in a regulated environment. Well, so am I, and so are we. However, you will note, that we preface our reference to “fun”, with the word, “successful” because, it all about carrying out appropriate, well thought through activities. If you don’t, you cannot be effective. Because as a business angel is someone who puts his or her money into a venture in return usually for equity, they go about their work as DBA do in a systematic way. But that is still fun!
Peter Eales BA Hons Chartered Marketer FCIM FIDM
Founder Director Dorset Business Angels
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