Finding Angel investment for your company
Investors play a vital role in the success of small businesses. Beyond the financial aspect, they bring invaluable expertise, guidance and industry connections to the table. In addition, investor backing is often seen as an endorsement of a company's potential, which can attract more customers, partners and employees. This article covers some of the key types of investment that are available and will look at a couple of specific organisations that may be able to help you.
Angel investors
An Angel investor falls under the umbrella of private equity, and is a form of equity financing which is when you raise money by selling shares in your business, either to your existing shareholders or to a new investor; in this case, an Angel investor. They usually belong to a network of other Angel investors and they can not only offer investment but can also provide advice to help you grow and develop your business.
One such group of Angels that you may want to check out – Mainstream – is based in Exeter.
Established by Michelmores law firm back in 2019, they are registered with the UK Business Angels Association (UKBAA), and are a 60-strong group of investors/entrepreneurs who are looking to invest in early-stage businesses – as well as offering support too.
An Angel Group such as the newly formed Angel Investors Bristol (www.angelinvestorsbristol.co.uk) could also prove to be a good source of early-stage funding. It has over 60 members and is growing quickly. AIB focuses on South West startups and scaling SMEs.
Crowdfunding
Crowdfunding originated in the UK back in 1987. It allowed musicians to tour through donations from fans. Today, the market is now huge and can be an effective form of raising capital for SMEs and startups. There are several forms of crowdfunding, which are as follows:
• Peer-to-peer lending (P2P); this idea is similar to a bank loan, but in this case you borrow from various investors. In fact, with peer-to-peer models people lend money to a business and get their money back with interest.
• Equity crowdfunding; each person who invests in your business is allowed a stake in the company, proportional to the amount invested.
• Rewards-based crowdfunding; with this, people contribute with the amount of money they desire and receive goods or services in exchange. For e-commerce, creators and businesses this is a great way to build a community around their brand. Offering different levels of reward, in line with the amount of money people invest, is a great way to get the public to play an active part in a project.
There is an Exeter-based crowdfunding organisation called Crowdcube that was set up in 2011 which can provide funding opportunities and advice to new SMEs. Since the company started, they have backed over a thousand businesses across Europe – including four Unicorns worth at least US$1bn.
Any investment type has a risk factor involved that could lead to you losing all your money.
For more details on the highlighted companies, go to: https://www.michelmores.com/mainstream/, www.angelinvestorsbristol.co.uk
If you need access to broader advice and support for your business then it’s worth looking at the Heart of the South West Growth Hub, which is a LEP-funded (voluntary partnerships between local authorities and businesses) service that can help you access a wide range of free business advice for startups and established businesses – covering Devon and Somerset.
Do you know of any other sources of investment? Answer in the comments