How do I get started with Angel Investing?
Being an Angel Investor can be an exciting ride. From in-person Dragons’ Den style pitching events, negotiating and mentoring, to follow-on funding and hopefully a successful exit, Angel Investing offers a fantastic opportunity not just to diversify your investment portfolio but also to provide a fascinating new aspect to your work.
Don’t go it alone
Whilst some Angel Investors do work alone, most find it helpful to be part of a group or syndicate. Being part of an Angel network has a range of other benefits which go further than having access to regular, screened deal flow.
Angel networks generally run regular pitching events which give you the opportunity to meet with other Business Angels, this can be both a fun and useful exercise for learning from other, more experienced investors. It can be helpful to collaborate with other investors, whether that’s by co-investing or simply bouncing ideas and opinions around with your peers.
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Anglia Capital Group also offer specialist advice and education to Angel Investors through partner organisations on everything from portfolio management and legacy planning to legal and accounting matters.
Online deal platform
Through our private online platform, ACG Members have access to screened deal flow 24/7.
“I want to feel some sort of connection with the business – both in terms of the management team and the sector. Connection with the people involves building trust in them as individuals and confidence in their expertise in their sector. Ultimately, I want to feel that the business mission is something that I’m happy to support and that the management team are well placed to deliver on their objectives.”
Helen Withers, Anglia Capital Group Member
Research your options
There are many different Angel networks. The UKBAA has a wealth of information on the different groups across the country. Whether you want to attend in-person events in your region, you’re happy to watch all your pitches online or you have a specific sector which you’re interested in, there will be a group which fits with your goals.
In a survey of our members, access to screened deal flow was listed as the key benefit of membership to Anglia Capital Group. If you decide to join an Angel network, it is vital to ensure that there is a thorough screening process in place so that you know it will be worth your time and effort to attend events and engage with the entrepreneurs.
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Attending a pitching event will give you a good idea of how the group works. Anglia Capital Group offer the first year of membership for free so that prospective Angels can have the chance experience our pitching events to get an idea of how things work before committing.
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Prior to attending a pitching event, be prepared to self-certify as either a High Net Worth Individual or Sophisticated Investor, as defined by the Financial Conduct Authority under the Financial Services and Markets Act 2000 (FSMA).
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Making your first investment
Pitching events can be exciting, especially when you see a business or an entrepreneur that you really connect with. For many investors, people are the most important component of a business. Assessment of the expertise and commitment of the management team is often a key element in the decision on whether or not to invest.
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After the pitching event, the Angel Group or nominated Lead Investors will reach out to you to find out if you are interested in learning more about any of the pitching companies. You might wish to request more information about the team, business plan, financials, or you may be ready to join a follow-up call with the other Angels to meet the entrepreneur properly and ask any question you have.
Anglia Capital Group have a private deal platform which members can access 24/7. Here they can find all of the information available on open deals.
Ask lots of questions! Now is the time to bring all your questions to the table. Things to consider are:
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Investment thesis
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Deal structure
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The team
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Financials
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Market data
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Competition
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Exit strategy
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Professional variety is one reason for many investors to consider becoming Angels. It can be incredibly intellectually stimulating working with a variety of start-ups, it gives a different aspect and variety from the day-to-day work and offers the chance to develop new skills. This initial stage of discovery, when you are finding out about a new business is a really exciting and interesting time. Although an Angel group will usually have carried out some due diligence as part of their screening process it is important that you satisfy yourself with your own due diligence as well, as ultimately this responsibility falls upon you as the investor. Sometimes it can be helpful to work with the other Angels to share your research.
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After an initial follow-up call with other investors and the entrepreneur you will have the opportunity to declare whether you would like to commit an investment and on what terms. If this is your first deal don’t be afraid to speak to the other investors interested in the deal. They will be only too happy to share their insights with you.
Once the due diligence is complete, terms are agreed and the whole round is in place you will be asked to confirm your commitment and the paperwork will be processed accordingly. You may need to be patient here, rounds can take some time to close. The entrepreneur may not have received enough commitment from your Angel group to close their round. If that is the case, they may well be involved in pitching to other groups. Once the round is complete, you will receive final versions of the legal documents and instructions for transferring funds. Once funds have been processed, the business you have invested in will send you a share certificate. At this point you are officially a shareholder in an early stage company. From this point you can, if you wish, begin to work with the company to share your expertise and help them to push their business to the next stage. Some investors choose to be silent investors and some are highly active but however you choose to work, this is the start of your Angel investing journey!