Business angel

Business Angels are private investors who invest between 20.000€ and 250.000€ in unquoted small and medium sized businesses. They are often businessmen and women who have sold their business. Theyprovide not only finance but experience and business skills. Business Angels invest in the early stage of business development filling, in part, the equity gap. [EBAN website]

The Role of BusinessAngels

Angel capital fills the gap in start-up financing between "friends and family" who provide seed funding, and venture capital. Although it is usually difficult to raise more than a fewhundred thousand dollars from friends and family, most traditional venture capital funds are usually not able to consider investments under US$1–2 million.

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The role of Business Angelsis represented from the graphic. Business Angels take part when no other source of financing is available. They contribute to the good construction of the plans, supporting to the young entrepreneurs;They are co-creators because they propose to the young entrepreneurs new products and new services as money, experiences, nets of knowledge (WIPO-INSME, 2006)

Key Succesfull Factors

1. Highdeal flow
2. Knowledge of the business and particular skills or contacts
3. Full trust in the management team
4. Own due diligence of the market and of the technology
5. Clearunderstanding of the revenue model
6. Realistic valuation of the company
7. Perfect understanding of the liquidity risk
8. Planning of sufficient financial reserves for future roundsadvantages:

• They bring in managerial skills.
• They are able to give guarantees to third party.
• They access to a network of important relations in industrial or financial level.
•Their financial aid is temporary.

Disadvantages:
• There are possible divergences of strategies between Business Angel and the entrepreneur, or differences of purpose.

According to the...