What is an Angel Investor?
An Angel Investor is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. unlike Venture Capitalists (VCs), who invest other people's money, angels invest their own personal funds.
The Typical Profile Angels are often successful entrepreneurs, retired executives, or industry experts. Because they are investing their own cash, they can make decisions much faster than a VC firm.
- Stage: They usually invest at the "Pre-Seed" or "Seed" stage—often when the company is just an idea or a rough prototype.
- Check Size: In the UK, a typical angel ticket ranges from £10,000 to £50,000, though super-angels may write checks up to £250,000.
- Motivation: While they want a return on investment (ROI), many angels are also motivated by the desire to "give back" to the ecosystem or mentor the next generation of founders.
Angel vs. Venture Capitalist The main difference is the source of funds and the level of process.
- Angels: Invest personal wealth. Flexible terms. looser due diligence.
- VCs: Invest institutional money (pension funds, etc.). Strict mandates. Intense due diligence. Board seat requirements.
The UK Context: SEIS & EIS If you are raising from angels in the UK, you must understand SEIS and EIS. The UK government offers generous tax breaks to encourage angel investing:
- SEIS (Seed Enterprise Investment Scheme): Offers angels 50% tax relief on their investment.
- EIS (Enterprise Investment Scheme): Offers 30% tax relief.
For many UK angels, SEIS eligibility is a "go/no-go" criteria. If you don't have your Advance Assurance from HMRC, many will refuse to invest.
Key Takeaway: Angels are the first "outside" money into your business. They take high risks in exchange for equity, heavily incentivized by UK tax relief schemes.
