Business angels

Published on October 31, 2023   9 min
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My name is Rudy Aernoudt. I'm professor at the University of Ghent in Belgium. The topic of today is Business Angels.
When we speak about Business Angels, who are we speaking about? Well, Business Angels have some characteristics. First of all, they have an enterprise background. So, it's people who are involved or have been involved in business. The first characteristic is enterprise background. The second one, they have money. That money mostly comes from the fact that they have been sold their company. They have money, enterprise background, and the third category, they have time. Business Angel, it's an entrepreneur, he or she doesn't like to be called ex-entrepreneur. It's an entrepreneur, has money and has time. With those three elements, we are having people that can invest mainly in startup companies. Interesting to say, they're always interested in minority stakes. They don't want majority because they have been through that. Now, they want to help starters, assist them, but they don't want to be major shareholders. Looking to the assets, on average, they are spending 25% of their assets which are using for the investments and they're looking for return which is in minimum 20%.
What are they looking for? They're not looking for scaleups, they're looking for startups, investing relatively small amounts of money. The average is 60,000 per investor, which is the investment varying from 25,000-250,000. They want to share their managerial skills and their networks. We can consider that Business Angel's money in contradiction to banking credits, it is smart money. Smart money meaning they put money, but at the same time they want to have something to say in the company because the money is spent and they want to help the starter in running and managing his company. In general, there is no sector reference, but mostly Business Angels try to invest close to home because they want to be involved in the company, they want to spend some time in the company. So, it's a relatively regionally based investment. They are seeking profits, but not on the same level as Venture Capital Funds, but at the same time, they always want fun, they want to challenge. It's not only about a return driven investment, they want to be involved and they want to have some fun as well and really want to be part of the business.