The recently published first government report on the UK business angel market concluded that “angels are increasingly ‘the only game in town’ for businesses seeking smaller amounts of equity finance”. The report revealed that the angel investment market is growing at an unprecedented rate, with more investors registering with business angel networks than ever before.
The British Business Angels Association recognises that there are now 24 registered business angel networks in the UK in August 2010. The services provided by business angel networks in the UK vary significantly and with so many different to choose from, it can be hard to asses the quality of a network.
Small Business News published 20 questions that the entrepreneur should ask of any angel network before making a decision to trust them with his/her fund raising and these are worth considering. Capital Brokers has added one extra.
About investors
How many investors are in your network?
Where did those investors come from?
What sort of information do you hold about them?
Do you know how many have expressed an interest in my sector?
Do you know how many would be interested in my stage of development?
What is the typical profile of your investors?
About the deal
Is there any exclusivity or can I go to other networks?
What happens if I find the funding myself whilst working with you?
About the process
How do you actually get my business in front of investors?
Do you produce any marketing materials for me?
Do you help me prepare by business plan?
Do you come to investor meetings?
Do you help with negotiations and valuations?
How long does the whole process take?
Is there a time limit on the help that you give me?
Track record
How many companies do you act for per annum?
How many completions do you achieve per annum?
What do you class as completion?
What are your total funds raised per annum?
What is the average deal size?
Are you registered with the FSA to broke equity funding?
So when you are looking for funding, talk to a few business angel networks and compare their answers to these questions. The UK’s and EU’s most successful business angel network Beer & Partners has raised in excess of £17million for small businesses in the last two years alone taking on promising businesses from all over UK as their clients, and then presenting those businesses to their network of over 1,700 business angels, and 300 institutional investors.
