What are business angels?

Business angels are wealthy individuals who invest in startup and growth companies in return for equity in the company. The investment can involve both time and money depending upon the investor.

Typically business angels have already made their fortune through other business ventures, possibly their own startup or a career in business. Most are men aged between 45 and 65. However, investors can be younger – particularly in the technology sector.

Business angels can operate independently, but many work as a syndicate. This is because 40% of all angel investments are lost. Only the top 20% achieve more than a 50% return. To avoid losing a lot of money on one big deal, an investor needs to make a number of investments and spread the risk.

The British Business Angels Association (BBAA) estimates that business angels invest roughly £300 million every year. BBAA research has indicated that business angels invest more in early stage businesses than formal Venture Capital Funds.

The term business angel covers a wide range of individuals investing varying amounts of money at different stages of business development. In general there are six different types of investor:

Virgin. Has not yet invested

Latent. Has not invested in the past three years


Wealth maximising. Experienced businessmen and women investing for financial gain

Entrepreneur. Backs businesses as an alternative to stock market investments

Income seeking. Invest for income or to gain a job

Corporate. Companies that make regular investments, often for majority stakes.

What can they offer?
Business angels are a vital tool used to fill the gap between venture capital and debt finance – particularly for startup and early stage companies.

They also provide a useful source of equity finance – where the investor takes a stake in the company in return for a cash injection – for relatively small amounts that would not otherwise be available through venture capital.

Investments can be anywhere between £10,000 and £250,000 although in practice most investments are in the region of £25,000. In addition to a first investment, business angels often follow up with later rounds of financing for the same company.

As well as cash, business angels can offer years of experience in the business world. Although some prefer to become a sleeping partner, others will get actively involved in your business from writing a marketing plan to taking the company through a flotation on the stock market.