October 18, 2022
Business angels - support in the early phase
Business angels support start-ups in the seed phase in return for shares in the company. These are economically independent private investors who cover financing gaps in the early stages. In this phase, the company is still too immature to obtain a loan or venture capital investment.
Most Angels are well established businessmen who have either already made an exit with a start-up company themselves, or who hold management positions in a company. They are characterised by a good network and a high level of economic understanding. Among Angels, a distinction can be made between financing and consulting business angels. For the strategic decision of the start-up, the Angel should be examined in advance. Unfortunately, there are also black sheep among the financiers. Under no circumstances one should give money in advance to someone who calls himself a business angel. Angels who state that they need an amount of money for the business audit are usually not serious.
Business Angels for early financing
Financing angels spread their investment widely. It is based on the calculation that relatively many investments do not survive. Their goal is therefore an investment that is worthwhile for them.
Business Angels as consultants
In addition to financial support, business angels can bring advice and contacts to the young company. Since there is a lack of financial resources for the consulting services at the beginning, some angels offer to contribute their experience to the start-up in an advisory capacity. Especially in the seed phase, the knowledge and experience of a business angel can be valuable to get a warm intro to further investors.
Before taking on a business angel because of his or her consulting skills, you should do an intensive background check to see if he or she is capable of keeping the promises made.
Participation in innovative start-ups can be subsidised by the state under the INVEST - Venture Capital Grant Programme. INVEST reduces the risk of capital participation by means of an acquisition allowance . The investor thus has the opportunity to acquire the shares at a lower price, which he/she does not have to repay if the company fails. Go to INVEST - Venture capital grant.