Business Angel: the saving angel for your company?
Besides banks, there are now many more ways of financing. Every situation requires a different solution. Consider, for example, the credit unions, crowdfunding and micro credit. And have you ever heard of Business Angels? This almost always concerns (ex) entrepreneurs who have left money from the sale of a successful business that they once started themselves or took over from their parents. In addition to money, they can also be of value with their knowledge of business and network. Before they make an investment, they look closely at your personal attitude as an entrepreneur and your business plan. They usually demand a minority share in your company in return for their investment.
Unknown makes unloved
Research shows that only a quarter of SMEs are familiar with the use of Business Angels. When looking for financing, only 3 percent goes to a Business Angel. Nevertheless, this financing does not harm SMEs: a large majority of these SMEs with a Business Angel have been able to seize opportunities through the financial support. Interest group Business Angels Networks Netherlands (BANN), of which I am the chairman, finds it very important that entrepreneurs find their way to Business Angels. It is a very good alternative way of financing. Certainly when you ask for a slightly more risky investment, something that banks are not so keen on these days, they can be essential.
Both for existing companies and starters
For existing companies, Business Angels can (re) finance a liquidity gap or enable new growth. They are also very interesting for starters. Not only do they bring money, but they are also involved hands-on and share their knowledge, experience, know-how and network. And they also want sounding boards when an important decision has to be made. In fact you bring in a partner, but for a limited time. This also means that Business Angels participate in the decision-making process when important decisions have to be made. Good arrangements must be made about this in the participation agreement.
There is another important difference compared to other forms of financing: unlike a bank or investment company, a Business Angel does not necessarily have to invest. It is his own funds, obtained from previous companies and he does not have to account for what he does with them. Most Business Angels are or have been entrepreneurs themselves. The point is that they like it and it's exciting. If you only want capital, do not opt for this form of financing.
Cup of coffee
How can you best approach such a Business Angel? Be as personal as possible. This is also the best way to quickly determine whether there is a mutual click. You can email, call or invite investors to talk about your plans over a cup of coffee. In any case, a good start is to make it clear to everyone in your network that you are looking for an investor. After all, you never know how a cow catches a hare. Your accountant, bank, intermediary, family member or neighbor, who knows, one of your contacts may know someone who wants to work with you. But with a good business plan you can of course always turn to one of the members of Business Angels Networks Netherlands.
Harry Helwegen, chairman Business Angels Networks Netherlands (BANN)