A recent report in The Telegraph predicted that 36,000 small businesses would go to the wall this year, many many more than last year. While naturally some of these businesses will fail because their products are inferior or they lack a solid business plan, many worthwhile ventures will cease to exist simply because the hardworking, innovative individual or team behind them will not be able to find the funds to take their great ideas, inventions, products or services forward.
In the “good old days”, if your business was in need of funds to guide it through troubled economic waters you’d reluctantly pop down to your bank and get a loan to tide you over until sunnier times returned. Unfortunately the British banking system has been in disarray for some time now, making business loans more and more difficult to obtain. The funds that normally would be available to bolster start-ups have dried up, leaving many would-be business successes with no other option than to close their doors for good. Through no fault of their own, these business owners are no longer able to acquire the bank funding to move forward with product development or marketing, and many think they have nowhere else to turn. If they had only known about angel funding and the business-saving benefits a business angel can offer to start-up ventures and small companies, they could have survived the lean times and used the economic lull as an ideal chance to establish a solid foundation and prepare for prosperity when the good times return.
Business angel funding today is more important than ever. In an era where the banking system has repeatedly let down entrepreneurs leaving them without the funds they need to succeed, a business angel willing to invest in their venture can provide a life-changing turning point that can mean the difference between success and failure.
Business angels are high net worth individuals who risk their own money by investing in start-up and small business ventures in the hope of a return – of course, it’s far more scientific than simply a “hope”, but then the calculations each business angel uses are individual to them. In many cases a business angel is someone who has experienced their own success in business and now has the desire to invest their money, and sometimes their expertise, in new ventures that appear promising. A business angel will often invest in ventures that display the capacity for rapid growth and show a realistic chance of being ready for sale within a few years, and these investors are an integral component in the success of start-up companies.
In fact, with the banking system in utter chaos and lacking the ability to provide funding as it normally would, these maverick investors are now the lifeline for small businesses in need of a helping hand or a boost in the right direction. Because business angels have generally worked hard to get where they are today, many appreciate the importance of motivation and perseverance, while also understanding what it feels like to have a great idea without the means to fully exploit it.
These days innovation and determination are simply not enough for many businesses to succeed. Without proper funding from a willing and able business angel, many more ventures will pass into the realm of “promise without prosperity” and fade away as so many fledgling start-ups have done before them.
The banking system may have let us down; however, as long as there are business angels determined to buck the trend of a depressed market and see the potential in new ventures, there will always be hope for a brighter future.
By Bill Morrow, Founder of Angels Den
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