Guide

Business angels

How to secure business angel investment

Before you apply for business angel (BA) investment, you should make a shortlist of potential investors you feel would be a good match with your company.

Making your business investment ready

Your business should be investment ready before you apply for funding. This means preparing a thoroughly researched business case, including a realistic valuation of your company's worth.

You should provide:

  • audited accounts for the past two years
  • evidence of current performance
  • profit-and-loss forecast for next year
  • business bank statements for the past six months
  • profiles of each partner or director in your business

Pitching to business angels

Business angels are more likely to be interested in your proposal if they:

  • understand the product or service
  • have worked in the same industry
  • are confident your business is well managed
  • feel they can bring added value to your business
  • are not being asked for a huge investment, or repeated investments

When pitching your business plan to a BA you should cover:

  • the benefits they would gain by investing
  • details of the investment required
  • terms of the proposed deal - eg share of control, skills you offer and timescale of investment
  • the ability of your management team to implement the plan

Finalising the BA investment deal

It can take several months to finalise BA deals legally and for funds to be transferred. You should also allow for additional finance to cover legal fees and bank charges.

Legal elements of BA deals include:

  • shareholders' agreement - relationship between the shareholders
  • subscription or investment agreement - terms of the share subscription
  • service agreement - eg employment contracts with managers or directors
  • other contracts - with more junior employees, suppliers, or customers
  • disclosure letter - details of any warranties or assurances agreed between the parties
  • memorandum - list of company's powers and the amount of share capital
  • articles of association - company's internal regulations
  • share options - eg giving tax-advantaged share options to new or existing employees under the government's Enterprise Management Incentive (EMI) scheme

For more information seeĀ secure equity investment.