Crazy Risk Taking Business Angels?
Business Angels come in different shapes and sizes. But are they really like? Crazy? Successful? Generous or in it for the money?
That is a question that not only entrepreneurs ask themselves, but also the Business Angels too.
Why?
Most investments that gain Angel investment will have not one single investors but a small team or committee or even a board. And one Business Angel is going to want to know who they are investing alongside. If the Business Angels don’t have mutual respect among them, then the investment is at risk.
This is why Angel investors will often form a small team and, collectively, invest in a number of projects.
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Pounds and Pence
In the first recession investors wanted business plans that offered new simplified services or goods that make things work better (ie. increase efficiency – such as self-service on the web for better prices) or that reduce costs (such as better conferencing or collaboration on the web allowing businesses to cut corporate travel).
However, as opinions strengthen that stocks have rebounded too fast and property assets have not fallen far enough, entrepreneurs and investors need to start thinking about how to handle the second recession.
Now, this is not to say that a second recession is guaranteed, simply to say that the risk of a second recession is sufficient for it to be a part of your plan.
And this is where it gets difficult…
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“Venture Capital funds available for start-up and growth businesses has dropped 70% since 2000″, said Anne Glover chief executive of Amadeus Capital Partners at the BBAA Annual Awards Dinner.
This means that businesses seeking new capital that are unable to raise bank finance (and who is able at present?) will need to increasingly turn to Business Angels.
In the view of Anne Glover, this represents a huge opportunity for Business Angels as the Venture Capital businesses will not be able to take all the best deals and leave the angel investors with the left-overs.
In fact, a theme that developed during the recent BBAA event was that Venture Capital firms want to work with Business Angels.
A number of VC firms, such as Catapult, look to invest alongside Business Angels. Rob Carroll, managing director of Catapult said “investing alongside experienced entrepreneurs and angel investors increases our chance of success.”
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