Contents
- What is a business angel?
- The role of a business angel in startups
- History and examples of business angels
- How to find a business angel?
What is a business angel?
A business angel is a private investor who is willing to invest their own funds into young startups with the aim of their development and profit generation. Unlike venture funds, business angels use their personal finances, which allows them to offer more flexible terms for startups. Typically, these investors provide capital in exchange for an equity stake in the business, which usually amounts to around 15%.
The role of a business angel in startups
A business angel not only provides financial support but also acts as an expert, advising startup founders on various aspects of the business. This can include assistance in shaping strategy, finding customers, or managing finances. Investors are interested in seeing their investments begin to yield profits, and therefore actively participate in the development of projects.
It is important to note that business angels are considered venture investors, as they support startups in the early stages of their existence. However, unlike venture funds, they do not have strict regulations for their investments and can independently decide how much time and resources to allocate to a project.
History and examples of business angels
One of the most famous business angels in the USA is Fabrizio Grinda, who has closed over 245 investment deals, including the first deal with Alibaba for $300 million. His successes highlight that business angels can significantly influence the growth of startups by providing not only financial resources but also strategic support.
An interesting fact: the first business angels were wealthy theatergoers in the USA in the early 20th century. They invested in new theatrical productions on Broadway, helping them not only financially but also through their connections. Although this endeavor often did not yield profits, it offered the opportunity to be part of the arts and to socialize with famous artists.
How to find a business angel?
To attract the attention of a business angel, a startup must prepare a thorough business plan that clearly outlines:
- Project timelines;
- Required resources;
- Potential profitability;
- Team composition;
- Market value proposition.
For this, it is important to understand the target audience, conduct market analysis, and develop a viable business model.
Business angels can be found:
- Among acquaintances;
- On investment platforms such as EBAN or Seedsummit;
- In business angel clubs such as СОБА or AngelsDeck;
- At specialized conferences and business forums.