• Shahryar Barati

Equity Funding: Angels and Angel Networks


This is the second of a series of blogs to describe all of the common sources of equity funding and we hope you will find it useful.


Angels/High Net Worths

Angel investors are wealthy people who invest their own money into exciting new companies. Their criteria is as diverse as they are. Some will invest at an early stage before the product launch or even proof of concept. More often than not they will require some traction or validation (or revenue). This is particularly true with businesses where barriers to entry are low and there is a lot of competition.

Range (roughly)

£50k - £500k

Timeline

1-6 months, including due diligence and term sheet negotiation.

Key Players

  • Individual high net worths - There are databases such as Beauhurst in the UK where one can find data on HNW angel investors who have previously invested in growth companies. We at Capital Pilot are building our own database of angel investors as well to share our dealflow with.

  • Independent financial advisers - Clients will be high net worth, and often they will pass them deal flow.

Pros

  • Low fees

  • Can provide full fundraise without a marketing effort

  • Often will be able to provide hands-on support and guidance

Cons

  • Difficult to access them

  • May want varying levels of control over the business.

Helpful Links

UKBAA - Trade association of angels, who run good events for entrepreneurs and angels.


Angel Syndicates/Networks

Angel syndicates are organisations that manage deal flow, due diligence and transactions on behalf of their angel investor membership. They bring deals to their members, who then decide if they will invest their own money in the companies. Some operate their own funds to invest alongside their angels as well. They often utilise live pitching sessions or monthly/quarterly events to connect startups with investors. Some will have a specific sector or geographic focus.

Range (roughly)

£150k - £1m

Timeline

1- 6 months, including due diligence and term sheet negotiation.

Key Players

  • 24Haymarket

  • Newable

  • Cambridge Angels

  • Northinvest and GC Angels (Northern regions)

Pros

  • HNW members

  • They handle the transaction and due diligence

  • Often help with your pitch

Cons

  • High fees (5-10% of the fundraise size)

  • Often only connect you to angels at monthly or quarterly pitching events

  • Often make you jump through lots of hoops


Helpful links

Beauhurst - Most Active Angel Networks in the UK

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