Q: What is an angel investor?
A: An angel investor is a high net worth individual who invests directly into promising new businesses in return for equity.
Q: What is Angels 5K?
A: Angels 5K comprises individual angels who have joined together to evaluate and invest in new ventures and take advantage of tax breaks. This way the angels are able to share their experience and skills and pool their capital to make larger investments.
Q: What kinds of companies do angels invest in?
A: Angels look for innovative start ups that can grow quickly in sales and value. The people leading these companies are planning to “exit” the company in a short time period, often through sale of the company to an Initial Public Offering (IPO).
Q: How do I know my business is right for an angel group investment?
A: Angel investment is the right source of funding for only a small proportion of entrepreneurial businesses. When considering yourself for investment by an individual angel or angel group, ask yourself these key questions:
- Am I willing to give up some amount of ownership and control of my company?
- Can I demonstrate that my company is likely to realize significant revenues and earnings in the next 3-7 years?
- Can I demonstrate that my company will produce a significant return for investors?
- Am I willing take the advice from investors and accept board of director decisions I may not always agree with?
- Do I have an exit plan for the company that may mean I’m not involved in 3 to 7 years?
Q: When should I approach an angel group?
A: In general, the best time to seek angel funding is when:
- Your product is developed or near completion.
- You have existing customers or potential customers who will confirm they will buy from you.
- You’ve invested your own money and exhausted other alternatives, including friends and family.
- You can demonstrate that the business is likely to grow rapidly in the next 3-7 years.
- You have a clear business plan.
Q: How does the angel investment process work? Are there key steps?
A: The full process often includes screening of an executive summary of a business plan; talking to an angel and submitting a business plan; a presentation to the group with a Q&A period; due diligence on your company and its management team; negotiating a term sheet and legal documents; post-investment support, including service on the company’s board of directors, monitoring reports, and providing mentoring and advice. Click here to see the angel investment process in detail.
Q: How likely am I to secure an investment?
A: It will very much depend on how well you fulfill Angels 5K’s criteria for investing. Only a small percentage of companies make it through the full process to investment.
Q: Will I have to pay a fee to participate in the screening process or to present to Angels 5K?
A: There is no fee to screen your application. There is a £100 fee to make a presentation at a meeting.
Q: Will the members of Angels 5K sign non-disclosure agreements to protect confidentiality?
A: Angels 5K takes confidentiality very seriously and all members are required to sign agreements not to disclose confidential information that they receive as a member.
Q: What is the difference between angels and venture capitalists?
A: Angels generally invest their own money in start-ups and early stage companies, while VCs mostly provide capital they have raised from others to later-stage businesses for growth.
Q: How much money do individual angels invest in a company?
A: The amount depends on many things, but most investments by individuals are between £5,000 and £20,000 per company round. Many times, several individuals invest in the same company at the same time, making the total investment in the business much higher.