Friday, September 25, 2009

Business Angels in South Africa: What's the big idea?

After recent articles on the use and benefits of business angels on popular small business Blogs such as Viva Start-ups (Where to find a business angel in South Africa) and the Investors network Blog (Angel Investors key to economic recovery) its clear that business angles and angel finance is fast becoming a popular source of business finance for South African entrepreneurs. Business angels, who are most cash rich Individuals or groups who invest in fast growing businesses in return for a share in the business, is becoming a popular option due to the current economic slowdown.

What exactly are the benefits of attracting a business angel to be involved in your business?

Business Angels typically invest in businesses with:
an investment need between R100,000 and R7 500,000
the potential for high return - Business Angels s are not averse to high risk
good early stage development or expansion
a presence in a particular sector

The advantage of using a Business Angels is that they often make an investment decision quickly, without complex assessments. However, you will still need to draw up a professional and tailored business plan.
Most Business Angels s can bring valuable first-hand experience of either working in a small business or running their own business venture. They're also likely to have local knowledge, as they tend to focus their investments within a small geographical area.

Some Business Angels may be eligible to have their investment funds matched by the government under its Enterprise Capital Funds (ECFs) within its Finance for Business product. ECFs are commercial funds, targeted at small and medium sized enterprises (SMEs) and investing a combination of private and public money against a share of equity in small, high growth businesses seeking up to R20 million of equity finance.

From an entrepreneur or small business perspective, it really is a no-brainer. Not only do you get the capital you need with which to start or grow your business but you also get someone who has been there and done it as part of your team.

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