The greatest source of seed and start-up capital comes from successful entrepreneurs and executives who have achieved wealth from their gains in previous investments. These people are known as Business Angels.
Business Angels, also known as "informal private investors", are private individuals who invest capital in companies during their early stage of development. In addition, they contribute their know-how or experience in company management and can offer valuable expertise and guidance. Angels usually seek active participation in the company in which they invest.
Business Angels can be a substitute for classical bank financing or venture capital which can be difficult to attract at the early stage of a company's life. They are primarily motivated by return on investment and Business Angel involvement can often help secure access to venture capital or classical bank loans.
The average initial investment by Business Angels ranges between €50K and €250k individually, or can form syndicates (partnerships with other Business Angels) for investment up to €500k and beyond. Business Angels generally invest in the region where they live and in areas in which they have greatest expertise/knowledge. They may not necessarily look to invest in new technologies, although some specialise in providing finance in such areas.
The ideal Business Angel will have the following:
- a strong commercial track record;
- excellent business credentials;
- capacity to invest;
- ability to identify commercial opportunity;
- time to invest in the creation of a new company;
- vision to transform new technologies into solid businesses;
- established links and relevant industry contacts.
Where can I find a Business Angel?
Due to the disparate nature of individuals with money, finding Business Angels is not an easy task. However, in recent years, both Enterprise Ireland, IntertradeIreland and the Business Innovation Centres (BICs) have been working together to build networks of Business Angels and offer a matching services for companies and investors.
Enterprise Ireland's Growth Capital department can facilitate access to Business Angels who have an ongoing relationship with the agency. Enterprise Ireland, in conjunction with InterTradeIreland, supports the Halo Business Angels Partnership programme. Halo facilitates access to a network of registered Business Angels. This partnership is managed on a local level by the following;
On a national level, and with a particular focus on syndicates, is:
Halo Business Angel Network (HBAN) - contact Michael Culligan
Tax Relief for Business Angel Investors
The Revenue Employment Incentive and Investment Scheme allows individual investors to obtain income tax relief on investments made, in each tax year, into Employment and Investment Incentive (EII) Scheme certified qualifying companies. There is no tax advantage for the company in receipt of the EII, but securing EII status may enhance their ability to attract other external funding. Certification for EII is a matter for the Revenue.
How to access Business Angel Funding?
Whether you are looking to become a Business Angel or you are looking to meet a Business Angel, contact the Growth Capital team at Enterprise Ireland or any of the Business Angel Networks in our directory.