A Guide to Angel Investing

This page provides a brief guide to the ins and outs of Angel investing. Please contact your Regional Manager if you would like more information on becoming an Angel.

What is a Business Angel?

A business Angel is a person who invests money in a business in return for a shareholding in that business, either individually or as part of a group. Angel investment typically ranges from £25k or $40k either on your own or as part of a small group of investors.

As well as providing capital investment, Angels often like to get involved in the business; in a management capacity, offering contacts, negotiating deals or in the day to day running of the company. Being able to give something back and have some fun along the way are the two key reasons our Angels have told us they continue to invest in start ups and SMEs.

Qualifying to become a Business Angel

In order to qualify as an Angel an individual must self-certify as a High Net Worth or Sophisticated Investor. As part of self-certification with Angels Den, Angels are asked to sign up to our Terms & Conditions which includes an important Confidentiality section. Apologies to those of you who hate forms but we have tried to make this as painless as possible and our registration wizard will guide you through the process.

Angels Den operates within Financial regulations and takes self-certification extremely seriously. Legal action will be taken against anyone found to be in breach of the confidentiality agreement or acting outside the regulations.

Who should become a Business Angel

The short answer is anyone with money to invest who can self-certify and is interested in helping small businesses achieve superior growth. However you should not invest if this is your only spare cash, most training courses recommend that you put a maximum or 10-15% of your investment portfolio in this sector.

Finding a great company to invest in

The main factors to consider when choosing an investment is whether you believe the company in question has a great idea, a sound execution plan and a robust commercial model that will produce a healthy return on your money. It is also important that you have a good rapport with the business owner if you are going to actively be involved in the day to day management of the company.

  1. Browse Business Plans

    If you like reading, it is a good idea to start out by browsing through a number of business plans on the Angels Den website and see what investment proposals the entrepreneurs are offering. You will be able to view these once you have registered as an Angel with Angels Den. Each business is categorised by criteria such as region, investment amount, sector and stage of business helping you identify plans that appeal to your criteria or you can simply browse through all the plans on the site.

  2. Meet business owners

    The most important stage is to meet some businesses in person and we offer three ways to do this.

    • Local SpeedFunding events where you will get to meet a number of entrepreneurs face to face and hear their pitches. Speedfunding is fast and furious and gets results. Most Angels say it’s the most exhilarating hour of their month and whilst not every business will be for you, typically 90% of Angels attending find at least one business they are interested in investing in. Click here to find out more about SpeedFunding or here to see when the next event is.

    • Angel Clubs where you can see pitches that are screened to the Club's requirements, then discuss as a group and co-invest in any that interest you.

    • Private Viewings where your Regional Manager arranges for businesses that interest you to have private meetings with you.

  3. Follow up with interesting businesses

    If you have met a business at SpeedFunding that you are interested in, your Regional Manager will set up a meeting with them to take discussions further.

  4. Keep up to date with the Angel Roundup

    In order to ensure you can keep abreast of the very latest opportunities, every two weeks we send out an email containing new businesses that are seeking funding through Angels Den. If any of these businesses are of interest, you can contact your Regional Manager who will provide more information and set up a meeting with the entrepreneur.

  5. Make an investment

    Once you’ve identified a company of interest you can start negotiations on the deal. Part of this process includes undertaking due diligence and drawing up a shareholders agreement. In order to make this process as simple as possible, Angels Den have formed partnerships with some key organisations experienced in completing this work.


It is worth bearing in mind that some investments may qualify for tax releif such as the UK based Enterprise Investment Scheme (EIS) tax relief. Click here for more information on EIS.

Things to consider along the way

The most important thing to look out for is whether you think you can work with the person behind the company you are going to invest in and if you think the experience will be enjoyable. Of course we recognise that you are in this to make a return on your money but as our Angels repeatedly tell us, the main reason for making Angel investments is to have some fun along the way. 

Another key consideration at the outset is whether or not the company has an exit strategy and within what timeframe. A bit like a pre-nuptial, agreeing the ideal exit strategy at the beginning sets expectations and will keep the company focused on achieving the end goal. 

Please contact your Regional Manager if you have any more questions or register with us.

 


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