The angels looking out for new talent in business
Angel investors help to create an 'echo effect' encouraging entrepreneurs.
In this period of job insecurity, the idea of setting up a business and being your own boss can seem increasingly tempting. Businesses require capital to get started and grow, but without going through the wringer on Dragon’s Den, where can that be found?
One option is via an angel investor, like Jackie Waring, the CEO of Investing Women, who puts money into a company in return for a share of that business.
Jackie has focused on helping businesses founded by women since discovering that they were commonly not seeing the same levels of growth as those with male founders. On new podcast Clever about Cash she revealed that a key barrier for women in business was access to finance.
Her research also led her to the phenomenon known as the "echo effect".
She explained: "[When] you increase the level of female angel investors you see a parallel increase in the levels of female entrepreneurs who are getting the backing to support growth and scaling their companies,"
Part of the team
But there's more to angel investors than depositing cash and waiting for the profits to roll in.
"Really good angel investors will be much more active," said Jackie. "They will also be very much helping that company and essentially part of the team."
So how do you know if you need an angel at your boardroom table? According to Jackie, it depends on the business.
"If someone has got an idea that could start to generate income for them pretty quickly ... the advice that I would give to them is don’t go for investment.
"You should only really be going for investment if it’s going to be something you plan to grow very big.
"It might need the development of a new technology, it might be something with a lot of research and development steps to go through before it starts to generate income.
"That’s the bit that’s quite hard to fund through traditional bank lending or similar kind of finance. And that tends to be the space that the angel investors come in."
Tips for working with angel investors
On the podcast, Jackie shared three tips for working with angel investors, based on her years of experience in business:
1. Don’t ask too early
"If you’re just sitting there with a concept you wouldn’t seek investment at that stage."
2. Don’t be un-coachable
"What we’re looking for are people who are willing to take on board other people’s perspectives and if you’re completely closed to that you’ll not get investment. Openness to feedback is absolutely critical."
3. Don’t be afraid of your figures
"It’s really important to understand your figures and finance in general. As the business founder and owner you need to understand those figures. If you don’t know how at the moment, try and learn."