Angel Investors and Angel Networks: What are they? How do they work?
Updated: Jul 3
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.
What are Angel Investors?
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.
Angel Investor Investment Amount Range (roughly)
£50k - £500k
How Long Does it Take to Raise Investemt Funds from Angel Investors?
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.
Angel Investors: Pros
Low fees
Can provide full fundraise without a marketing effort
Often will be able to provide hands-on support and guidance
Angel Investors: 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.
What are 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.
Angel Networks Investment Amount Range (roughly)
£150k - £1m
How Long Does it Take to Raise Investemt Funds from Angel Networks?
1- 6 months, including due diligence and term sheet negotiation.
Key Players
24Haymarket
Newable
Cambridge Angels
Northinvest and GC Angels (Northern regions)
Angel Networks: Pros
HNW members
They handle the transaction and due diligence
Often help with your pitch
Angel Networks: 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