Business Angel Funding

Business Angel Funding is worth considering if you have a high growth early stage business, typically where you can not demonstrate a profitable and cash generative trading record (so not attractive for bank funding).

What are the Pros and Cons of Business Angel Funding?

Advantages:

1. Business Angel Funding is typically equity finance so not requiring interest payments.
2. The funding does not need to be repaid until an agreed 'event'.
3. Many Business Angels have very useful sector experience
4. Angels often help 'open doors' for early stage businesses, gaining openings otherwise unavailable.
5. The Funding process will focus your mind on your Business Exit valuation and likely route.
   
   

Disadvantages:

1. Business Angels will negotiate an equity stake in your business ie. become part owners with you.
2. Business Angels have high growth expectations - your investment needs to compensate for other investments which may fail.
3. Many Business Angels will restrict their investment to say £25k so several Angels may need to be attracted to make the funding work.
4. Business Angels vary considerably in the amount and style of 'Due Diligence' that they conduct.

Business Angels are not fools, so it pays to be properly prepared for meetings, valuation negotiations and due diligence.

vfdnet Virtual Finance Directors enjoy working with Business Owners and Entrepreneurs to prepare the Business Plan and attract Business Angel Funding. Contact us to discuss your business finance needs.

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