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What are angel investors?

Have you ever had a business idea that needed significant capital to start? Angel investors offer an alternative to business loans or venture capital (VC) funding.

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The majority of the self-employed in the UK are working solo in small or medium-sizes businesses, as contractors, consultants or freelancers. And have often funded the transition from employment  through preparation and savings or working around full-time employment. This is the community that IPSE has always represented and supported. But what if you’ve also come up with an idea for a new business or start-up which would require more capital to get going? What are angel investors and how could they help?

If you’ve been self-employed for a while, you may have encountered products or services that could be massively improved. Or a new opportunity which isn’t obvious to anyone outside the freelancing world. Angel investors offer an alternative to taking on business loans, or trying to secure investment from large venture capital (VC) firms. And they also get involved with advice and direct support, providing guidance in growing a different type of company from those generally classed as self-employed.

  • What are angel investors?
  • What are the benefits of angel investment?
  • What are the potential problems with angel investors?
  • How to find angel investors in the UK
  • More support for new and early-stage self-employment

What are angel investors?

What are angel investors?

What are the benefits of angel investment?

One of the biggest advantages of angel investment is that unlike a loan, you won’t have to make repayments and accrue interest on the cash injection to your business. 

The other main benefit is that you get the involvement of one or more experienced angel investors, including access to their skills, contacts, mentorship, and their existing reputation and credibility. This can all help your business grow, and improve the chances of securing later rounds of investment.

How to find angel investors in the UK

Along with applying to appear on Dragon’s Den or putting out a call through your existing network, a variety of organisations and schemes exist to help connect entrepreneurs and investors.

These include:

Before approaching any potential angel investors or applying to any funding initiatives, it’s important to have a solid business plan, financial records and projections. You’ll also want to demonstrate some initial evidence of demand for your product or service, and have a compelling elevator pitch, along with a presentation to walk people through your plans.

It’s important to be honest and transparent to find the right fit for investment, and to be prepared to negotiate over the exact terms of any deal. Being patient and finding the best option will be much more beneficial and likely to succeed than rushing into the first potential investor offer you receive. 

Don’t overlook the time required for due diligence along with any negotiations, and make sure you understand all of the terms and conditions before agreeing to any deal. This is a long-term commitment which involves selling part of your business based on future success, and it’s essential that everyone understands the objectives, risks and responsibilities involved.

More support for new and early-stage self-employment

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