This article from Oxford Foundry Start-up School will help you decide if angle funding is for you
- Angels take their own decisions and use their own financial capacity, whilst VCs are investing other people’s money to make a return.
- They usually take ordinary shares, unlike VCs who take preference shares, so they invest on the same terms as the founders sharing the risk and thus more closely aligned to the founders.
- Angels normally do not take large amounts of equity, between 10-20% is normal, since they know that entrepreneurs need to be in control and incentivised – and will need to give away more equity when taking on VC funding.
- Angels bring “smart money”. They have often been entrepreneurs or been involved in growing a business and understand the challenges, and can bring industry experience, strategic advice, introductions to customers and networks.
- Average Angel Deal: £30-50k as an individual. However they usually invest as a syndicate so they can bring sums of £100k to £2m as a first round. If you need more money than that for your first round, you will need to consider VC funding.
- Angels are prepared to do follow-on funding and as a syndicate can generally mobilise a number of rounds to take the business through to Series A.
- Angels typically co-invest to build the deal including with VCs, Grants and Crowdfunding.
- Angels bring patient capital and do not seek to set a short deadline to exit. They will generally work with a business to ensure any exit is carefully planned and at the right time, but are prepared to wait 8-10 as necessary.