How to choose the right Business Angel?

To fund the creation or development of his business, the project manager can rely on a Business Angel photo credit: Shutterstock

To fund the creation or development of his business, the project manager can rely on a Business Angel photo credit: Shutterstock

To fund the creation or development of his innovative business, the project manager can call in a Business Angel. Knowing how to choose your future partner well and being able to convince him are two essential prerequisites for ensuring the sustainability of the company.

Summary:

  • What is a Business Angel?

  • Network of Female Business Angels in France

  • Which Business Angel to Request?

  • How to convince 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 who is looking for financing to create (prime) or develop their activity. To contribute to the success of the project and create added value, Business Angel monitors the company, provides it with its expertise, provides advice and makes its address book available to it.

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

Network of Female Business Angels in France

Female entrepreneurs struggle to raise capital unlike men. According to the Sista Collective Barometer, conducted in 2021 by the Boston Consulting Group (BCG), investors continue to favor male teams, which represent nearly 85% of the funded start-ups and more than 90% of the funds raised in 2020. of start-ups founded by female or mixed teams has increased 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 respond and created their own network of Business Angels.

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

In 2020, in a crisis situation, the members of the network invested 1 million euros in 20 innovative projects. “These investments are made on the basis of criteria that combine economic performance, profitability, diversity and impact. Of the 20 projects invested, 30% are managed or managed by women and 35% are regional cases (Lille, Lyon, Marseille, Toulouse, Grenoble, Nîmes). The vast majority of 2020 investments are early rounds, 6 of them refinancing. ”

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

Which Business Angel to Request?

Everything will depend on the nature of the project carried out by the innovative company. The goal is to support it both financially and strategically. It is therefore advisable to ask Business Angel who operates in the same activity sector (or is approaching it) because he already has expertise, will identify the proposed project more quickly and more easily can be convinced of its potential. Business Angel, which owns a stake (though a minority) of the company’s capital, is the decision maker. Therefore, it is recommended to surround yourself with someone who wants to achieve the same goals with whom a relationship of trust can be created.

At the financial level, the company must contact a Business Angel with the capacity to meet its expectations: It is recommended to look at how much 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 should allow the company to develop its network. Being supported by a recognized network of Business Angels is a guarantee of credibility and a good business card to persuade other financial partners.

How to convince Business Angel?

Convincing a Business Angel takes time (several months). This requires communication, argumentation and persuasion. In order to be selected, the project manager must convince the investor of the feasibility and viability of his project. For this purpose, it will be necessary to prepare a file that presents the team, the project, its innovative nature and its business model.

From this step, it must be demonstrated that the shareholders’ remuneration is guaranteed. If the project is of interest, the team will support it orally in front of 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 investors’ entry into the company’s capital. Finally, the course ends with the signing of a shareholders’ agreement, which confirms the financing.

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