--- title: What are angel investors in the UK? How they can help grow your business description: Joe Lennon on who angel investors are, the different types, what they look for in a business, and how they make money funding early stage businesses. image: https://www.wellersaccountants.co.uk/hubfs/.05%20Blog%20Images/Blog%20Header%20Images/Blog%20Header%20What%20are%20angel%20investors%20in%20the%20UK%20How%20they%20can%20help%20grow%20your%20business.jpg --- [![Wellers Logo](https://www.wellersaccountants.co.uk/hubfs/.09%20Wellers%20Logo/Wellers%20Logo%20-%20Landing%20Pages.svg "Wellers Logo")](https://www.wellersaccountants.co.uk) This is a search field with an autosuggest feature attached. - There are no suggestions because the search field is empty. ![](https://www.wellersaccountants.co.uk/hs-fs/hubfs/aWellers_2017_Images/Wellers%20Images/What%20Do%20You%20Need%20Images/search-icon.png?width=600&name=search-icon.png) ****** ![bannerImage.png](https://www.wellersaccountants.co.uk/hs-fs/hubfs/Wellers%20%20Blog%20Assets/bannerImage.png?width=1129&name=bannerImage.png "bannerImage.png") ## Beyond the numbers - [Personal Tax (3)](https://www.wellersaccountants.co.uk/blog/topic/personal-tax) - [Business insight (1)](https://www.wellersaccountants.co.uk/blog/topic/business-insight) - [Tax News (1)](https://www.wellersaccountants.co.uk/blog/topic/tax-developments) - [Hospitality (1)](https://www.wellersaccountants.co.uk/blog/topic/hospitality) # What are angel investors in the UK? How they can help grow your business [**Joe Lennon](https://www.wellersaccountants.co.uk/blog/author/joe-lennon) **25/1/2023 **27 minute read [**](https://www.linkedin.com/sharing/share-offsite/?url=https://www.wellersaccountants.co.uk/blog/what-are-angel-investors) [**](https://www.facebook.com/sharer/sharer.php?u=https://www.wellersaccountants.co.uk/blog/what-are-angel-investors) [**](https://twitter.com/share?url=https://www.wellersaccountants.co.uk/blog/what-are-angel-investors) ## [Joe Lennon FCCA](https://www.linkedin.com/in/josephanthonylennon/) explains what angel investors are, and how they can help your early stage business. You've hit a brick wall! A particularly challenging time for any entrepreneur. You may have an exciting early stage business, or even a great concept, but now you need an injection of finance. This could be for any number of things. The point is you need investment to launch the business, or get it growing! You'll then be faced with which funding option to choose from. Do you borrow money in the form of debt that you have to pay back with interest? Or, do you sell a stake in the business? For this post we're dealing with the option of selling equity in your start-up to [**angel investors**](https://www.wellersaccountants.co.uk/revealing-where-how-to-find-start-up-funding-lp). The better you understand an investor, the better equipped you'll be to appeal to their motivations and pitch to them successfully. By reading on you'll comprehend: - What angels look for - The rationale behind their investment decisions - How they make money - The skills angels can bring to your start-up [![Angel investors or bank finance? Get in touch to ascertain the best option for your start-up >](https://no-cache.hubspot.com/cta/default/2284600/5126f9d9-876d-4c12-a5f5-c2af3a267bc9.png)](https://cta-redirect.hubspot.com/cta/redirect/2284600/5126f9d9-876d-4c12-a5f5-c2af3a267bc9) In this blog: | [What are angel investors?](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Whatare) | [**What angels look for in a potential investment opportunity?**](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Lookfor) | | --- | --- | | [**Why choose an angel investor?**](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Whychoose) | [**1. Size of the opportunity**](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Size) | | [What are their motivations for investing?](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#motivations) | [2. The leadership team](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#leadership) | | [What returns do angel investors look for?](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Return) | [**3. Evidence of growth**](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#growth) | | [How an angel investor can benefit your business](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Benefit) | [**3. Tax benefits**](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Taxbenefits) | | [**Things to be aware of**](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Aware) | [The different types of angels](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#types) | | [**How to find angel investors**](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#Find) | [1. The super angel](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#super) | |   | [2. The founder angel](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#founder) | |   | [3. The speciality angel](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#speciality) | |   | [4. The wealthy and bored angel](https://www.wellersaccountants.co.uk/blog/what-are-angel-investors#bored) | ## What are angel investors? An angel investor is typically a high net worth individual, or serial entrepreneur, who provides [**funding for start-up businesses**](https://www.wellersaccountants.co.uk/blog/start-up-funding-when-and-why-you-will-need-it) in exchange for ownership equity or, convertible debt. They usually invest in the very early phases of a start-up, or even at the seed stage. These investments can take the form of either, a one-time boost to help your projects get off the ground, or a series of funding rounds to help you through the challenging early stages of starting out. Angels are also referred to as angel funders, business angels, private investors, seed investors, and informal investors. According to the UK Business Angels Association, it estimated there there are up to 15,000 angel investors in the UK who account for several thousand fundraising deals every year. ## Why choose an angel investor? If you're looking to fund your business from either the concept stage, or an early stage in the business lifecycle (see Shirlaws stages diagram below), then angel investors could be a good choice. - In exchange for equity they offer an active engaged role in **helping you run the business** to make it a success. - The angel will be bought into you, as an individual as much as your business concept, their focus will be on launching the enterprise and not just making profits in the short run. - Unlike business loans from banks, angel investors provide more favourable terms and are unlikely to expect payback in the event that your business fails.  [![The stages model Shirlaws official version](https://www.wellersaccountants.co.uk/hs-fs/hubfs/.08%20Wellers%20Visuals%20and%20Internal%20Projects/Stages%20model/The%20stages%20model%20Shirlaws%20official%20version.jpg?width=660&height=495&name=The%20stages%20model%20Shirlaws%20official%20version.jpg)](https://shirlawsgroup.com/) ## What are their motivations for investing? Angel investors will put money into small businesses to help them grow so that they can generate a decent return. Angel investing is often the primary source of funding for a business and typically lasts around 8 years. The angel will then expect to sell their shares at a profit. Their motivation is usually profit driven. Investing in small businesses comes with a high level or risk. In accepting the risk, angels may expect a better return than if they put their money in other investments, such as listed organisations on the stock market. ## What returns do angel investors look for?  Angels will typically invest £10k - £500k. Some have made larger sum investments. They'll typically judge the success of an investment based on the exit multiple and the Internal Rate of Return (IRR). An exit multiple looks at the total money taken out of an investment divided by the total that originally went in. If an angel invested £50k in a business and took out £200k just 5 years later then the exit multiple would be 4X or, 400%.  IRR is more complicated as it takes the passage of time into account. It provides the rate at which an investment will break even. The Angel could compare what their money could have done over the 5 years if they'd invested elsewhere.  IRR is the interest rate that makes the Net Present Value zero. Net Present Value is how much the investment is worth in today's money. The bigger the IRR the better. You can find out more about exactly how IRR is calculated at [Maths Is Fun](https://www.mathsisfun.com/money/internal-rate-return.html). Let's say just for example an investor receives 10% interest on their investment. This means if they invest £2,000 they would earn £200 in a year (£2,000 x 10%). [Start on Purpose](https://startonpurpose.com/Article/what-rate-of-return-do-investors-expect) states that angels will expect an annualised IRR of 20% - 40%.  ## How an angel investor can benefit your business Having an angel investor on board in your business brings many benefits. Typically angels provide funding through equity finance. This means your business doesn't become weighed down with debt. Consequently there isn't the need to provide security to secure the funding, and there isn't the pressure of interest and repayments. Angels tend to be individuals, they're not part of a corporate entity. Their decision making tends to be simple and quick unlike a [**venture capital trust**](https://www.wellersaccountants.co.uk/blog/what-you-need-to-know-prior-to-raising-venture-capital-funding) for example. They will bring: - Experience to draw upon on the operational side, having run their own business - [**Strategic insight**](https://www.wellersaccountants.co.uk/blog/strategic-direction-why-you-need-it-to-achieve-growth) through their knowledge of particular sectors - A network of contacts and suppliers to help grow the business  ## Things to be aware of Being an equity investment means you're diluting some of your ownership and even giving up a bit of control in your business. Should you eventually look to sell up, you may therefore receive less value than if you'd continued alone. Of course you have to realise that the business might not reach such value without the help of an angel and their money through [**fundraising**](https://www.wellersaccountants.co.uk/blog/entrepreneurs-investors-fundraising)! Angels tend not to take a majority share in the business. They will however, probably expect a voice in decision making and how things are run. ## How to find angel investors Below is a list of 30 angel investment firms, including the size of their investments, and their area of focus. | **Network** | **Number of investors** | **Deals** | **Total of investments (as at Jan 2023)** | **Investment range** | **Investment focus** | | --- | --- | --- | --- | --- | --- | | [Envestors](https://envestors.envestry.com/) | 4,600 | 1839 | £113m | £250k - £2m | General | | [24 Haymarket](https://24haymarket.com/) | 100+ | 50 | £79m | £500k - £5m | General but mostly consumer, SaaS, and health tech | | [Equity Gap](https://www.equitygap.co.uk/) | 120+ | 100 | £84m | £100k - £500k | General but mostly consumer, life sciences, SaaS, and Food & Beverage (F&B) | | [Archangels](https://archangelsonline.com/) | 100+ | 113 | £124m | £250 - £1m | General | | [Cambridge Angels](https://cambridgeangels.com/) | 60+ | 104 | £248m | £50k - £500k | Technology, internet, software & hardware, and health tech | | [Newable](https://cambridgeangels.com/) | 500+ | 104 | £95m | < £500k | Medtech, AI, space, robotics, and 4IR | | [Tricapital](https://tricapital.co.uk/) | 50+ | 87 | £70m | N/A | IT, biomedical, and engineering | | [Kelvin Capital](https://www.kelvincapital.com/) | 250+ | 28 | £50m | £500k typically | General | | [Oxford Investment Opportunity Network](https://www.oxfordinnovationfinance.co.uk/) | N/A | 50 | £26m | £200k - £2m | Disruptive technologies | | [Angels Den](https://www.angelsden.com/en-gb/) | 20,000+ including crowdfunding platform | 41 | N/A | £50k - £1m | Technology | | [Cambridge Capital Group](http://www.cambridgecapitalgroup.co.uk/) | 80+ | 100+ | £30m | £150k – £2m | IT, cleantech, and medtech | | [Ascension](http://www.ascension.vc/) | N/A | 31 | £46m | N/A | General | | [Clearly Social Angels](http://www.clearlyso.com/about-us/) | N/A | 30 | £19m | £300k – £1.5m | Positive social impact businesses | | [Advantage Business Angels](http://www.advantagebusinessangels.co.uk/) | N/A | 200 | £30m | £50k – £500k | General | | [Angel Academe](http://www.angelacademe.com/) | N/A | 35 | N/A | £70k – £350k | Female-led tech businesses | | [AngelClubRCA](http://www.rca.ac.uk/business/innovationrca/our-start-companies-angelclubrca-and-investment/#angelclubrca) | N/A | 90 | N/A | £40k – £250k | General | | [Angels in MedCity](http://www.angelsinmedcity.org.uk/) | 500+ | 43 | £14m | £50k – £250k | Health tech | | [Astia](http://www.astia.org/) | N/A | 132 (incl. VC fund) | £25m (incl. VC fund) | £50k – £500k | Female-led tech businesses | | [Dorset Business Angels](http://dorsetbusinessangels.co.uk/) | 50+ | 35+ | N/A | £50k – £1m | General but in the South of England | | [FIG](http://fig.vc/about/) | N/A | 17 | N/A | £50k – £5m | General | | [Firestartr](http://www.firestartr.co/) | 50+ | 43 | £110m | N/A | General | | [FSE Group](http://www.thefsegroup.com/) | N/A | 734 (including fund) | £113m (including fund) | £10k – £50k | General | | [Gabriel Investment Syndicate](http://www.gabriel-is.com/) | N/A | 12 | £30m | £25k – £250k | Tech businesses located in Scotland | | [Galvanise Capital](http://www.galvanise.co/) | N/A | 14 | N/A | £150k – £1m | Marketing, advertising, data, and analytics | | [Green Angel Syndicate](http://greenangelsyndicate.com/) | 300+ | 28 | £14m | N/A | Businesses in the fight against global warming | | [HBAN](http://www.hban.org/) | N/A | 25+ | N/A | €100k - €500k | Medtech, software, F&B, & cleantech | | [Investing Women](http://www.investingwomen.co.uk/) | N/A | 21 | N/A | N/A | Female-led tech businesses | | [Minerva Business Angel Network](http://minerva.uk.net/) | N/A | 99 | £16m | N/A | General | | [NorthInvest](http://northinvest.co.uk/) | 133 | 14 | £5m+ | £25k – £1m | Primarily fintech, Cyber security, medtech, and media | | [DSW Angels](http://dswcapital.com/dswvc/) | 100+ | 7 | £4.5m | £250k – £1m | Software, digital, and other tech | | [Rising Tide](http://risingtide.eu/) | N/A | 22 | £2m | £1m – £1.1m | Fintech |   ## What angels look for in a potential investment opportunity: ### 1. Size of the opportunity Angels will look at the issue your addressing with your solution and how big the market of potential buyers is. Will the market get bigger and will they make repeat purchases? They'll consider competitors and why people would purchase your solution over others out there. If you're dealing with a new market then the question will be how big it can get and what are the factors driving its growth. Does your solution appeal to the market, is it [**a scalable business model**](https://www.wellersaccountants.co.uk/blog/do-you-have-a-scalable-business-model-how-to-find-out)? ### 2. The leadership team A large pool of potential buyers is all well and good. However, the angel will look to see if you have the leadership team to develop a strategy and implement a **[business plan](https://www.wellersaccountants.co.uk/blog/what-is-the-purpose-of-a-business-plan)** to seize the opportunity. They'll consider your experience, skills, and team chemistry to ascertain if you have the commercial acumen and resilience to make a success of the opportunity.  ### 3. Evidence of growth A great way to convince angel investors of the opportunity is to provide them with evidence. Show them that the business is already on the initial rungs of growth. They'll then have proof that you're expanding and gaining traction in the market.    Data that supports claims and shows that you're making things happen can be very convincing and preferable to an opportunity that is untested and based on assumptions. ### 4. Tax benefits When raising investor finance, you should be aware of the potential tax benefits angels will want to take advantage of. The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) exist to make investments in small businesses tax advantageous.  **[EIS and SEIS](https://www.wellersaccountants.co.uk/blog/seis-or-eis-investment)** help investors manage the risk of funding early stage enterprises. You should therefore look to structure any fundraising in such a manner that it qualifies for these tax reliefs. ## The different types of angels From what we've described so far, angel investors sound very professional and akin to a full time career. That's not necessarily always the case. There are several different types which we cover briefly below: ### 1. The super angel They are professional investors with many different organisations forming their portfolio. Bringing this kind of investor on board can bring real kudos that leads to further introductions and investment from their network potentially including [venture capitalists](https://www.wellersaccountants.co.uk/blog/what-is-venture-capital). With so many investments however, they may be too busy to provide real useful input into the strategy and running of your start-up. ### 2. The founder angel These are fellow founders of start-ups who have made money doing so. Their motivation from an investment perspective is they want to give back by helping fellow entrepreneurs. They hope to make money while doing so. They may in time make a sufficient number of investments to become super angels. They've run a successful start-up before and have much useful knowledge to impart with you. A danger is their motivation may not be as an investor but more from a philanthropic mindset.  ### 3. The speciality angel These angels have a long history working in an industry. They invest in opportunities they see in that specific sector. They'll have a great network of connections and much knowledge built up  from their work over the years.  Despite all their knowledge they may be used to certain ways of doing things meaning they lack a truly disruptive mindset embraced by start-ups. ### 4. The wealthy and bored angel These tend to be professionals but can be any number of people in work. They're likely to be both wealthy and somewhat bored of their day job. Think lawyers, doctors, dentists, and surveyors, to name a few. They're seeking some excitement in their working lives. They'll live some of that by investing in a start-up. They'll have a lot of money to invest but may struggle to add any value to your business. They may also prove quite demanding for progress updates. [![Angel Investors](https://no-cache.hubspot.com/cta/default/2284600/f4499101-ace3-4edb-9be7-49ef8566d973.png)](https://cta-redirect.hubspot.com/cta/redirect/2284600/f4499101-ace3-4edb-9be7-49ef8566d973) This post was created on 10/07/2019 and updated on 25/01/2023. Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. 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