Looking for funds? Banks are not the only option open to growing businesses. There are also private investors and not all are as fierce as the TV Dragons! There are also business angels.

“Business angel funding is simply a lump sum of money offered in exchange for a share of your business,” said Bill Morrow co-founder of Angels Den a website that brings angels and investment seekers together.

Angels generally want between 5% and 30% of a business. “The investment is usually not secured against any assets other than the business itself. The angels are usually private individuals, come in all shapes and sizes, and from all walks of life.”

Fellow co-founder Lois Cook added: “Angels generally invest between £5,000 and a few hundred thousand pounds. If they get together in informal groups or syndicates the upper limit can be millions of pounds.” The angels will be looking to work with someone they like and trust, she said.

They need to know there is the potential for them to make money so the business has to be able to grow fast and allow them to sell their shares after a few years. “They’ll need to see at least a brief business plan and financial forecasts and on larger investments will have legal and accountancy professionals check out your business in reasonable depth.”

Bill Morrow added: “By investing in your business, an angel is helping you to succeed but they are also gambling on your ability to generate rapid growth. To give them confidence they will need to know a bit about your background and skills as well as your business idea."

That lending decision will be based on the value of the company. It’s extremely difficult to work out how much a fledgling business is worth. It’s highly subjective and in the end comes down to how much someone is prepared to invest in you.

www.angelsden.co.uk