How to choose the right Business Angel?


To finance the creation or the development of his company, the project leader can call on a Business Angel photo credit: Shutterstock

To finance the creation or development of his innovative company, the project leader can call on a Business Angel. Knowing how to choose your future partner well and being able to convince him are two essential prerequisites to guarantee the sustainability of the company.

Summary :

  • What is a Business Angel?

  • Networks of female Business Angels in France

  • Which Business Angels canvasser?

  • How to convince the Business Angel?

What is a Business Angel?

A Business Angel is a person who invests part of his capital in innovative companies with growth potential (start-ups, SMEs) and looking for financing to create (priming) or develop their activity. To contribute to the success of the project and generate added value, the Business Angel monitors the company, provides it with its expertise, gives it advice and makes its address book available to it.

Generally, Business Angels are grouped in a network. The National Federation of Business Angels, France Angels, federates 64 networks as well as individual Business Angels. Similarly, the company EuroQuity, created by Bpifrance in partnership with KfW, connects project promoters with more than 1,500 investors. The capital invested by several Business Angels amounts on average to 400,000 euros and rarely crosses the bar of one million euros, each Business Angel contributing around 10,000 or 20,000 euros.

Networks of female Business Angels in France

Women entrepreneurs struggle to raise capital unlike men. According to the barometer of the Sista collective, carried out in 2021 by Boston Consulting Group (BCG), investors continue to favor male teams, which represent nearly 85% of the start-ups financed and more than 90% of the funds raised in 2020. Furthermore, while the proportion of start-ups founded by female or mixed teams is up slightly compared to 2019 (4 points), it is mainly due to this growing diversity within the founding teams. Faced with this phenomenon, women wanted to react and created their own networks of Business Angels.

In France, in 2003, a group of women launched the association Femmes Business Angels (FBA). According to the association, “the objective was then to bring together rare women present in the traditional financial universe of Business Angels to encourage them and promote the active role of women in the economy, and more present in entrepreneurship”.

In 2020, in a context of crisis, the members of the network invested 1 million euros in 20 innovative projects. “These investments are made on the basis of criteria combining economic performance, profitability, diversity and impact. Of the 20 projects invested, 30% are led or co-led by women and 35% are regional files (Lille, Lyon, Marseille, Toulouse, Grenoble, Nîmes). The vast majority of 2020 investments are first rounds, 6 of them refinancings.

In Europe, associations have also developed in recent years such as, for example, Women Business Angels for Europe’s Entrepreneurs or WomenWinWin. They all aim to strengthen female entrepreneurship and support women who wish to develop their businesses.

Which Business Angels canvasser?

Everything will depend on the nature of the project carried out by the innovative company. The goal is for it to be supported both financially and strategically. It is therefore advisable to solicit the Business Angel who vanishes in the same sector of activity (or approached), because he already has expertise, will identify the proposed project more quickly and can be more easily convinced of its potential. The Business Angel holding a share (even if a minority) of the company’s capital is the decision maker. Therefore, it is recommended to surround yourself with a person who wants to achieve the same goals, with whom a relationship of trust can be created.

On the financial level, the company must contact a Business Angel with the capacity to meet its expectations: it is recommended to look at how high previous projects have been supported.

As support must be provided throughout the implementation and development of the project, it is appropriate to favor a Business Angel at the local level.

Finally, the Business Angel must allow the company to develop its network. Being supported by a recognized network of Business Angels is a guarantee of reputation and a good calling card for persuading other financial partners.

How to convince the Business Angel?

Convincing a Business Angel takes time (several months). This requires communication, argumentation and persuasion. To be selected, the project leader must persuade the investor of the profitability and viability of his project. To this end, it will be necessary to compile a file presenting the team, the project, its innovative character and its business model.

From this stage, it is necessary to ensure that the remuneration of the shareholders is guaranteed. If the project is of interest, the team will support it orally before the members of a selection committee. If investors are seduced, the project will be deepened and a period of negotiations will begin to define the conditions for the entry of investors into the company’s capital. Finally, the course ends with the signing of a shareholders’ agreement which confirms the financing.

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