How you can find a business angel as a business start-up
Finding good business angels is not always easy. Nevertheless, there are some opportunities and networks as well as events where you can find an interested investor. We have put together the best options for you here.
Business angel networks
Business angels are organized in networks; there are currently around 40 such networks in Germany. Such networks can be found on the Internet. Entrepreneurs looking for help from a business angel can turn to one of these networks with a business plan.
Both companies and interested investors should first look around at BAND (Business Angels Network Germany). This registered association has been committed to the development of business angels since 1998 and organizes and promotes both the exchange of experience and cooperation. BAND has been the recognized umbrella organization for German business angels since 2001. The BAND lists around 3000 active business angels in Germany.
According to Nonprofitdictionary, the networks arrange a business angel, but a business angel can also be found through a start-up competition organized by these networks. Business angels and future entrepreneurs can get to know each other at these competitions, future company founders can convince business angels of their idea with a powerful presentation.
Such start-up competitions are often accompanied by seminars in which the basics for creating business plans are taught. The prerequisites for successful cooperation between the entrepreneur and business angel are a solid relationship of trust and as close as possible to one another. The business idea should contain good prospects for growth, the company founders should have the necessary knowledge and skills. It is in the best interests of the future sponsor to assess these correctly. Because if he backs the wrong horse, a total loss could be the ugly result.
Matching events can also help you find a good partner. At these events you can personally present your ideas to the investors present.
- One such event is, for example, the “German Business Angels Day”, which takes place once a year. All business angels nationwide meet here.
- There are also business angels exchanges that you can find via online portals such as ExchangeBA. You can register there and the exchange will present your business idea to various suitable investors. If they like your idea, further details will be discussed in a personal meeting.
What should you look out for in a business angel?
If you are shortlisted for a business angel, then you should definitely find out more about him. Maybe he has a website or gives references. You can also inquire about this angel with the BAND or in forums. If it is stated in which companies he has already invested, then ask these companies. How satisfied are you? How does the collaboration work?
Even if you are satisfied with your selection, you may not be completely green when you meet. Then you should look for another business angel. Because in the close cooperation it plays a big role that you get on well.
Prepare yourself well for the discussions on your part and put together all the necessary information about yourself and your business idea. When you meet your business angel, you will quickly find out how much he is interested in you and your idea and whether he is asking the “right” questions.
Make sure that he can answer you openly and honestly, and that he explains well. Because you want to benefit from his specialist knowledge and some people have enormous know-how but cannot properly pass it on.
The important arrangements you need to make with him are:
- The amount of his stake in your company
- The duration of its investment (usually 4-7 years)
- The amount of the investment (usually between 50,000 and 100,000 euros)
- The interest rate (which is high for business angels as the investment risk is also high)
How can you become a business angel yourself?
If you have money and know-how and want to invest both in a company, you can easily become a business angel yourself. To do this, you can register as a member on appropriate platforms and networks. There you can start with small sums as an investor. In addition, courses and seminars (e.g. BANDakademie) are offered that teach you further basics.
INVEST – venture capital grant
Anyone who invests in young entrepreneurs receives a 20% grant from the federal government on the investment amount. With this, the state wants to ensure that knowledgeable and financially rich companies increasingly invest in new start-ups.
However, both the investor and the company must meet certain requirements for this. For example, the grant is only available for an investment of a maximum of 500,000 euros. And the company must not be older than 7 years and not be listed on the stock exchange.
There are important tips and help on the website of the Federal Office of Economics and Export Control. There you will also find leaflets for entrepreneurs and investors.
Hopefully we could show you that there is a real alternative for you to look for a business angel as an investor instead of a bank loan. Even if you have to accept higher interest rates, you have an experienced businessman at your side who will advise you at any time. A service that a bank cannot provide.
In addition, the business angels are also ready to give you a hand from the start, if it is not even foreseeable how your company will develop in the first place. This means that these angels take on a higher risk than the venture capital companies, who only support you later, when they see that you have achieved initial success. They will advise you excellently in their own interest, as they do not help you out of charity, but pursue an intention to make a profit.