How long does it take to find a Business Angel?

Thursday, February 4, 2010 14:05
Posted in category Finding finance

Time to find a Business Angel?Angel Investors are not listed in the Yellow Pages and finding one can be a time consuming and expensive business, especially if using some of the pricey business angel intermediaries that are out there.

Actually the topic of where to find investors for a business opportunity deserves more attention and I’ll cover that in a later posting. You won’t see this covered in any of the other Business Angel networks blogs since they don’t invite comparisons, but Company Partners is probably the most cost effective and we aim to be open.

But back to timing. You’ve got a great opportunity, written your business plan and are just starting to look for an investor. How long do you think finding one will take? A couple weeks? A couple months?

The shortest time that I’ve seen that one of our members take was 2 days. The longest time 18 months. That’s in finding an Investor that was new to them (not family or friends).

There are so many variables at play; market area, quality of opportunity, how determined you are in searching, etc., that giving an average time can be misleading. However it is safe to say that it can take months rather than weeks and involve a lot of your own time.

There is a random variable also, Business Angels have a pattern of behaviour that means at any one time not all are available. They tend to dip in and out of the market, because once they have identified a couple possible opportunities they are out of action while investigating them. Coming back into the market if those opportunities hadn’t panned out, or just for more investment.

Finding an investor is though only one of the time elements, since you will also want to take some time to get to know each other and do due-diligence. The advantage of a Business Angel over for instance venture capital, is that they will make quick decisions, but both you and the Business Angel should do all you can to ensure that you will work well together before proceeding.

Finally there will be legal and accounting work to be completed in terms of possible partnership agreements (I suggest you do write down the roles and expectations you have of each other), share allocation and sorting out when funds may be input into the company.

As you can see this is not an overnight activity. Think of it in terms of buying or selling a house, the searching and surveyor (due-diligence) work necessary, together with the contracts, probably means they take a similar time and just like finding a Business Angel will be affected by the market and quality of what is being offered.

 

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16 Responses to “How long does it take to find a Business Angel?”

  1. Sean says:

    February 5th, 2010 at 12:53 am

    Well that’s very true and sometimes it can even take longer than 18 months because of the revisions required to the business Model or even the Business Plan.
    Thank you for great advice on this topic.

  2. Kevin Ryan says:

    February 5th, 2010 at 8:13 am

    Hi Lawrence, I find you blog very inetersting. However I must say I’m not sure my experience reflects yours in terms of business angels. I have been trying to raise capital for the past several months and whilst I have been told what a good opportunity I have, no one seems to want to put their hand in their pockets.
    I have been through due dilligence twice now with angels and at the last moment they pulled out. I know this can happen from time to time but finding a good angel who is serious about investing is almost like pulling hens teeth. I have paid several hundreds of pounds and waisted thousands of hours and still I can’t find an angel. Well lets hope my experience is not the norm and people out their can tell me that have done better.
    Kind Regards Kevin p.s keep up the good work

  3. lawrence says:

    February 5th, 2010 at 10:16 am

    Securing investment is never easy, does take time and you do have to try every avenue. It can be frustrating I know.

    Kevin, why not give us a go? I see you are registered with us, but never joined as a Full Member, or put your proposal live. You’ve got to try everything and we are a lot less expensive than others.

  4. Atiq Rehman says:

    February 5th, 2010 at 5:22 pm

    Hi All

    I agree Lawrence, it does take time and is not an easy task. A good business plan is not really the answer. Most VC’s from my experience want to either see a working prototype of a product which then will also take time and money but many will want to see actual sales before they look at your idea.

    So I would say keep focused and do what you can to prove your idea has that investment potential you require.

  5. Kevin Ryan says:

    February 5th, 2010 at 6:36 pm

    Hi Lawrence

    I could spend a whole page listing sites I have registered with etc… I agree it is hard work and righly so, however I am yet to find an angel or angels that are real, there are many people who say they want to invest and talk a great talk but when it comes to the crunch nothing. I’m not suggesting for one moment your site doesn’t live up to it. I guess what I am saying to people is be prepared for many many hours of wasted time chasing dead ends. Just an FYI, we have pre sales and a good product, we have proven what we can do and live in hope we might find someone who is serious. I may very well try your site Lawrence, so watch this space. By the way keep up the good work.

  6. Tracie Coggin says:

    February 5th, 2010 at 9:55 pm

    Just read this blog and felt that I had to comment. As an Investor, I feel that the question should probably read “How Long Does it Take to find a Suitable Project to Invest in?” I’ve been registered on this site for a little while now, and whilst at the beginning had a couple of enquiries, I’ve only had 2 over the last 4/5 months….and both of them were false leads. The first one seemed a good idea, until I read to the bottom of the page…and then it went in the bin. The second one generated a lot of interest from my side, to the point where I gave the guy my phone number and made arrangements to meet him, after having read a very detailed 4 page Business Plan. An hour before out meeting, he cancelled, saying he had to leave the country and needless to say I haven’t heard anything from him since. Also needless to say, if I DO ever hear from him again, he won’t be receiving a penny of my money. There are a lot of scammers out there and I agree with Kevin when he says be prepared for many many hours of wasted time. It works from our side too Kevin !!!!!! I am quite specific about where I want to invest though, so maybe I shouldn’t complain. At least this site is giving me the chance to get the feelers out there !!! Thanks Lawrence

  7. Alex says:

    February 6th, 2010 at 9:28 am

    You are very right Tracie, it should probably read “How Long Does it Take to find a Suitable Project to Invest in?” I published my project here, the site did it’s job, two people contacted me, I have a good idea of business, but, seems that the project is too big for a single investor. More than that, seems that investors are interested in getting their money fast out, that’s ok, but not to participate, which is ok to some point, if you just want the money. Further more, I think that an investment without a mission, without a team, without systems, without thorough planning, could not exist. My point is that: Business have no right answers, it’s a trial process, multiple guess, at least for a startup. That’s why it’s hard to find the right business or the right investor. And I think that you’re not complaining, in fact you’re helping the both sides here. I just want to say that I would wish an investor with your thinking. Best regards to all. Alex.

  8. geof Jones says:

    February 6th, 2010 at 10:53 pm

    I have tried Angelsden (7 interested parties, before the crash) and recently listed on here – I have worked hard creating the business with no backing and have now secured 2 major contracts worth £30k per month.
    I have to say that investment is a great thing if you get the right mix of money/experience. I know Investment could grow my business 10 times quicker – but I have found that investors are worse than getting grants from the government. You spend so much time focusing on investment that you take your eye of the ball and don’t grow organically.
    After 20 years as a self employed entrepreneur, I am now at the stage of my new company deciding do I release equity and chase the deal for months – or put all my efforts in to these new contracts and keep the business privately owned. My business is growing at near uncontrollable rate and its clear cashflow IS king, the margins are great, the overheads are low – but need to get the stock.
    I would happily give an investor 10% interest on a cashflow investment (with stock debenture) and when they have proved their worth would consider a percentage stake in the business for the right mix of money / experience – But with these deals secured I might be in a position to leave investment alone.
    You are always offered money when you don’t need it or you are at the control and mercy of an investor when our hand is stretched out.

  9. lawrence says:

    February 7th, 2010 at 9:59 am

    Geof you’ve raised a valid few points there. The decision to take on an Investor is not always straight forward and it’s true the whole process can distract from the focus on the business. A good Investor will hopefully add more than just the cash, but if it really is just cash you need, then other aspects could be looked at (although may have done so), negotiating with suppliers to build into your agreement the time that the cashflow requires, asset financing and invoice discounting can all help in the early stages.

  10. Education Tay says:

    February 12th, 2010 at 8:37 pm

    An interesting topic when starting a business, and a question everyone that owns a business asks themselves. I am starting an education and management training business on 1st March 2010 and I am not under any illusion other than investment will be difficult to secure. Investment in my business I most probable will secure, although finding the correct investor is the biggest hurdle for my proposed business. I do not mind giving away equity for something that will benefit or grow the business or cash capital. My plan is to start myself and let people approach me as I already have the skills, experience and commitment to succeed. An investor or not my business will grow and make significant ethical profits as it is more of a niche market and stable.

  11. Colin Tilson says:

    February 14th, 2010 at 5:52 pm

    We have been trying to find sensible investors for some time and are beginning to think that they don’t exist. we have a ground breaking product with high growth potential, hitting all of the right buttons ie the green agenda our own dedicated low cost high tech manufacturing facility in the far east. We also have customers queuing worldwide for our product which is ready to go into production. We are not looking for a fortune but are offering a good return also we are offering to buy back total share investment at the end of 12 months for any invest that is not wishing to continue. The team are all very experienced and we have a robust business model and a business plan with delivery expertise worldwide. unfortunately the only people that we find are are time wasters and information seekers. I would suggest that all so called investor website businesses vet their investors before going live.
    Colin Tilson getting on with business rather than talking about it.

  12. lawrence says:

    February 15th, 2010 at 9:18 am

    As this article mentioned it can take a while and a tricky combination of patience coupled with persistence is needed. If you are getting interest that’s an important first step. Investors will always want to ask more questions and investigate both you & the opportunity very carefully. This site is simply trying to introduce people to each other, like a real “dating site” would, to take on “vetting” each Investor would cause the site to have to charge very much more, even if such a thing could be done. Most Investor Networks will change hundreds if not thousands of pounds, for that you get more hand-holding but even they will not “vet” in the sense of taking responsibility for the Investor. However an important point that Colin is making is that it can be frustrating and take up a lot of management time, that needs to be factored in.

  13. Bill Aitch says:

    March 13th, 2010 at 2:39 pm

    Over the past 4 years I have attempted so many different government “Start-Up Grants”. They all have certain points in common:

     

    1/. Despite being called “Start-Up” they all demand that we have been trading successfully for at least 1 year, before we can even apply.

     

    2/. They are never more than £5,000, which would barely clear a month’s laundry & ‘leccy at todays prices.

     

    3/. They all demand registration at Companies House, which would cost several £?,000, & as a charity we would also have a similar problem with the Charities Commission. Obviously, we would also have horrendous legal expences for this, @ £600/hr., always assuming that we could find a suitably qualified solicitor who can drag himself away from the Golf Club, just long enough to snatch our money.

     

    We believe that the entire grant system, state or private, simply provides extremely good salaries, & pensions, for the idle rich civil service fat-cats whom we find in the relevant admin.

     

    They oft remind me of the Gestapo, & are at best gov.uk quangos.

     

    As for Business Angels, they appear to collect a far better income from the BBC/ITV than they would ever receive from any form of investment. The only place to meet ‘em is in a TV studio. I have tried to gain legal entry to so many areas of the press, & always fail at the first hurdle, it is a completely closed shop. Party members only!

  14. Ken McFeeters says:

    April 9th, 2010 at 10:51 am

    Bill, It sounds like you’ve had a disappointing time with the quangos. I have also spent a considerable amount of time with government agencies in Northern Ireland and basically you can spend alot of time getting no where. Don’t get me wrong they can be very good at certain things but be careful. I have managed to get considerable grant aid but don’t underestimate the time/effort involved etc.

  15. Eric Hawkins says:

    April 12th, 2010 at 7:54 pm

    I have read with interest many of the comments from both investors and those seeking an investment. My own conclusion is that in these tough times having lost a renewables energy business through this bank rolled recession and a government who has done nothing to support such an important industry as energy for the past 30 years. After 10 years and the creation of 8 skilled jobs I was not able to provide security for a £140,000 trade finance package over 4 months after signing an agreement to supply Aga Rayburn outlets.

    With sales of £3/4 million in 2008, projected to grow to £1.5 million in 2009, then upwards to £3 million by 2012, our dear bank manager at HSBC where we had a £20,000 OD wrote to tell me in April 2009 that my business was a credit risk to the bank and speculative and could not support the trade finance but was prepared to sign us into a invoice factoring agreement at a set up cost of £8,500. It was at that time I decided enough was enough and placed the business up for sale to find a buyer at any price to retain all the hard work that the whole team had put into it. What was for me a start up in 1998 using my own money as I felt the time had come for change in how we burn up what is left of the worlds fossil fuels the business went into administration and was sold off for £7,000 that included £30,000 of stock, displays and equipment to a person who knows nothing about the business.

    The speed of the recession which forced the closure of that business leaving my wife and I at 62 and 65 to re-think how we can start again, as we have no option to do exactly that, but never again being in hock to a bank. For us and our overseas investment in the manufacturing side in China we made 4 years ago, is our future in solar energy IF we can find a like minded investor who can take what has taken me 18 years of my life developing for the future of this country.

    Very few investors have yet to grasp outside the need to maximise gain with minimum risk but with no understanding of the business in the first place, except it’s a business that interests them because the media has exposed them to the words climate change and global warming and the need for renewable energy if we as a country are to secure our future energy needs. My American partner has the same problem with raising new capital and his company is listed on the penny pink sheet stock. His patented product allows my solar collector to store heat during the day and release it at night for heating a home tax free. In April next year Ofgen will pay out £0.18p a kWh to home owners who invest in solar heat generation, but as yet nobody knows about this.

  16. Mario says:

    January 26th, 2012 at 3:45 pm

    My opinion on this subject is simple, investors want to make money out of someone else’s ideas and work, and we entrepreneurs want the business experiece and money to start our own projects so it is natural that investors want to see that you can actually make money before they give you money to grow, there are many scamms out there and many entrepreneurs that only try to build a business because they have lost their jobs, not because they saw a problem, saw a need on the market and created a solution to solve that problem.

    So my advice is this, create a good business plan and think about ways to sell your product even before it is completely done (it is called lean management- if you don’t know this then you shouldn’t even be in business). Then yeah go to investors, you will be in a much better position to negociate with them.

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