How do I get funding for a new business | Informi

Business angels are people who look to invest in a business in return for getting a share of it. Only limited companies can sell shares, so this way of raising finance is not open to sole traders or partnerships.

To attract a business angel, you’ll need to have a solid business plan and be able to convince them your business has the potential for high growth. You’ll also need to demonstrate that you have the skills and drive to make a success of things.

An angel investor will typically put between £10,000 and £500,000 into a business. Some angels come together in groups or syndicates to make their investments. Most angels will look for the business to generate up to five times their initial investment over a three to five year period. 

If you find an angel who’s willing to invest in your business, the size of the stake they get is up for negotiation. You need to ask yourself if the percentage they’re asking for is worth the money they would invest. You would own a smaller share of your business but this might be worth more eventually if the business is successful.

Business angels tend to take a quite active role in the companies they invest in, so both you and a prospective angel need to be sure that you can work well together.

There are networks of business angels, which can provide access to large numbers of potential investors and advice on how to pitch and approach investors. You may be charged for such access.

The process of acquiring equity investment and therefore having shareholders involves the drawing up of legal documents. Make sure that you use suitably qualified and experience professional advisors.