Business Angels: who are they, how to find them?
The figure of the Business Angel can represent a real turning point for all those startups looking for funding to start their own project. In Italy, the phenomenon of Business Angels, also called “informal investors” or “Angel Investors”, is undoubtedly growing rapidly, but how can they help innovative startups? Who are they and how to find them?
In recent years, awareness has grown of how important it is to invest in innovative startups, not only for having economic feedback, but also to foster the growth of our country. To date, in fact, Italy has almost 11,000 start-ups registered in the special section of the Business Register, and it is precisely in this innovative development landscape that Business Angels come into play.
What is a Business Angel? Definition
As the name suggests, these are real guardian Angels who, placing maximum trust in the innovative project, choose to invest in the new business by making funds and knowledge available to the startup. It is therefore a question of full-fledged investors who decide to financially finance the project in order to start it and become a partner.
The figure of the Business Angel could be defined as follows:
They are experts in the sector who decide to invest their capital both for doing business, but also for passion.
Generally they are former business owners, freelancers, retired or still in business managers who choose to acquire part of a company, often operating in innovative sectors. Basically, they are “businessmen” with a substantial personal wealth and a discreet experiential background, able to make their specific knowledge available to the startup to develop the new idea.
A relationship based on trust is created between investor and startupper: the Business Angel, in fact, does not require particular guarantees for its investment. In fact, it assumes the business risk and has every interest that the project is successful in the medium to long term; precisely for this reason, it is defined as an informal investor.
This type of relationship that is established is convenient for both parties: the company obtains a guide at no cost capable of providing a set of skills and the economic resources necessary for the development of the project, while the investor ensures a good investment, despite the risks, which can guarantee him the realization of capital gains in the medium term through the sale (partial or total) of the initial investment.
How much and when does a Business Angel invest?
The informal investor comes into play in the early stages of the startup life cycle, generally during the seed or early stage, when the project has yet to debut on the market, or has just entered the market and the traction of the startup has been measured. itself.
But how much money does the Business Angel generally invest? Usually an amount between a minimum of 5-10 thousand euros, up to 100-200 thousand euros. Clearly, this is a general fact and it is possible to come across decidedly wealthy Business Angels who choose to carry out larger transactions.
Also, informal investors join club deals or Business Angel associations.
How to make the business project attractive
Are there any strategies to be adopted to convince a Business Angel to invest in the project? As it is easy to imagine, Angel Investors receive many contacts from aspiring entrepreneurs and it is more than legitimate to question what characteristics the “ideal” reality in which to invest should have. Undoubtedly there are some requirements that can make the startup more interesting in the eyes of investors, here are:
• Good Execution – It is essential not to forget that a good business idea cannot happen alone! Execution is essential for the idea itself to materialize and the project to be realized in all its potential. Before investing money in a startup, Business Angels must carry out assessments by analyzing the specific development process capable of defining and developing the business idea over time, namely its Execution.
• The Business Plan – This economic / financial document represents a real action plan that describes the company’s project in detail. It must positively bring out the strengths of the project, making its value and the real possibility of being competitive on the market clear and attractive.
• A good team – In order to define a good strategy that can get the startup off the ground, it is essential to have a winning team. The investor will make their own assessments taking into account the experience, skills and compactness of the team. The Business Angel, in fact, not only invests in the project but also in the people responsible for carrying it out. The determination and will of the entire team are essential to win over investors by making them passionate about the innovative idea.
• Networking – Building relationships and creating a network of contacts is essential to encourage the exchange of ideas, advice and information. This will make it easier for you to achieve your goals and be noticed.
How to find an Angel Investor
We are in the midst of the digital age and Social Media, but being present online and relying on the web may not be enough. To make yourself known and find a Business Angel it is important to activate all communication channels, even the informal ones.
Startuppers can rely on communities, local knowledge and personal contacts. There are specialized portals that act as a link between the new entrepreneur and potential investor.
For those who decide to rely on the network, online it is possible to find the most important recognized associations that bring together these investors. The best known are:
• IBAN: Acronym of Italian Business Angel Network. This is the main Italian group of Angel investing exponents
• ITALIAN ANGELS FOR GROWTH: is an Italian community of Business Angels, entrepreneurs and corporates who invest and support startups. It is currently the largest network in our country.
• INVESTORS CLUB: it is a network that has over 200 Business Angels who invest in all sectors of innovation and support startuppers in the growth of their companies.
First of all, it is important to investigate the characteristics and peculiarities of each group of investors, studying the websites of these associations and trying to understand what kind of projects have the best chance of being financed. Not all Business Angels, in fact, look for the same things: it is important to send the application to the one who is most similar to your business idea and thus increase the chances of building a successful business.
The importance of legal and tax support
How to choose between all these sources of funding?
Our advice, especially in the early stages, is to rely on serious, qualified professionals with proven experience in business consultancy, who will guide you with confidence in choosing the safest and most profitable financing methods for your business strategy.
Our Law Firm, thanks to the expertise and experience in consulting and assistance to start-ups, both in the legal, commercial and corporate fields:
- provides all entrepreneurs interested in starting their own start-up or defining an optimal business strategy, advice and specific assistance in bureaucratic and commercial practices;
- assists its clients in the market analysis phase, in the preparation of the business plan and in the search for the economic resources necessary to finance the start-up;
- supports the company at every stage of development, recommending the best commercial and legal strategies to be implemented.
Contact us immediately at the numbers +39 0683521985 or +39 3711453121, or write to us at info@studiolegalecoscia.it for specific advice.
