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So what is Angel or Equity funding?
Equity or Angel funding is simply a lump sum of money offered in exchange for a share of your business. The investment is usually not secured against any assets other than the business itself. By investing in your business an Angel is helping you to succeed but they are also gambling on your ability to generate rapid growth. To give them confidence they will need to know a bit about your background and skills as well as your business idea. Also they will want to know your commitment to the business, because if you decide not to proceed they could lose all their money. Many Angels say they look for 3 things in a business, the people, the people and the people. It may be corny but it's you are key to the success of the business.
Depending on their assessment of the risk, an investor will expect a corresponding share of your business. It’s a bit like the odds on a horse, the greater the risk of it losing, the longer the odds and therefore greater the winnings on the occasions when they are lucky. Especially if all you have is an idea and you haven’t got any business processes, prototypes or customers, you need to recognise what a gamble they’re taking and expect their share to be higher than if you are already up and running.
If you're not sure about whether you are ready for investment or whether equity funding is right for your business, you might want to attend one of our "What Angels Want" seminars and get the inside story. Register with us to get free tips on finding investment and the opportunity for free consultancy sessions in London, Bristol and Scotland.
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