Business angels are individuals who make equity investments in businesses with growth potential.
These can either be:
- businesses in the early stages of development
- established companies looking for expansion capital
Angels can invest on their own, or through an angel group/syndicate. Most commonly, angels invest in syndicates via a lead angel.
Angels can provide multiple rounds of finance and frequently co-invest with other sources of equity. Business angels provide two key assets.
- One is ‘smart capital’ where they offer their business experience and networks to pivot early-stage businesses to a higher growth trajectory. For example, they will often take a non-executive board position in the company.
- The second is ‘patient capital’ because to develop the business in this way takes time. Therefore, by acting as long-term investors, angels can play a significant role in getting innovative businesses ideas off the ground.
For a growing business, this combination of expertise and capital can be crucial for success. The angel investment market tends to be less sensitive to economic cycles and they tend to invest locally, resulting in potentially broader regional coverage of investment.
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