Frequently Asked Questions

What Is an Angel Investor?

An angel investor or business angel is a wealthy individual who invests their own funds in growing and early stage businesses, receiving a share of equity in return. In addition to providing a much-needed injection of capital, angel investors can also provide fledgling companies with invaluable business mentoring, since many are former entrepreneurs themselves.

Can Anyone Be an Angel Investor?

An angel investor is a high-net-worth individual who uses their personal assets and businesses expertise to help entrepreneurs get their business off the ground. A business angel is typically someone who has already made their fortune through their own business ventures.

What is the Difference Between an Angel Investor and a VC?

A VC, or venture capitalist, generally makes significant investments – often $2 million upwards – in a financing round. Angel investors, on the other hand, invest more modest sums, although these can vary considerably in size, from $10k to $500k usually.

While VCs invest funds from sources such as institutional funds, foundations and insurance companies, angel investors use their own money to fund businesses. VCs often invest once the business has reached a certain level of maturity, while angel investors typically seek out growing and early-stage businesses.

Both angel investors and VCs typically receive an equity share of the business in return for providing funding.

What Are the Benefits of Being an Angel Investor?

Angel investors can provide much more than just funding, providing budding businesses with their expertise, experience and pre-existing networks. Many angel investors take an active role in growing the business and ensuring it becomes successful. They sometimes work in networks to share ideas, spread the risk on a portfolio basis, and get input from a wider range of people and expertise.

What Criteria Do Angel Investors Seek in Entrepreneurs?

This can vary considerably from one angel investor to the next but, generally speaking, a strong management team with proven skills and experience appeals, as does a business proposition centring around a unique product or service with a competitive advantage and a large market.

It is important for entrepreneurs to have a clear picture of the market and a realistic strategy for market penetration. With angel investors typically working with entrepreneurs for a 5 to 7 year period, there needs to be an exit strategy and the potential for an attractive return on investment.

Fostering a strong sense of collaboration with the companies he helps, Mark Lyttleton is a professional business angel with stakes in more than 40 businesses. Although he regards himself as industry agnostic, Mr Lyttleton has certain criteria he looks for in the founders he supports. Mark Lyttleton emphasises the need for fledgling business leaders to be driven and passionate, as well as possessing an aptitude for thinking deeply about their business.