Airbnb, Twitter, Uber… Sound familiar? Even these colossal household names got help from angels. So if you have a killer business idea but not enough financial backing, then it’s time to swot up with our essential guide to business angel investors.

What are business angels?

Business angels, also known as angel investors, are high-net-worth individuals who invest their own money into early-stage businesses in exchange for equity. Unlike institutional investors, they often bring hands-on experience, industry connections and mentorship to the table, as well as capital.

Angel investment is typically used by startups that need funding to build a product, hire a team or reach new markets, but aren’t yet ready for bank loans or venture capital. Most angels invest between £10,000 and £500,000, either solo or as part of a syndicate.

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But why are they called angels?

Although they don’t sport wings or halos, the term does come from the world of theatre, stages and costumes. Back in the 1900s, Broadway producers would turn to the wealthy for financial help – those who gave money were called ‘angels’. Today, successful angels investors are better known for supporting tech start–ups.

Types of business angel investors

For many entrepreneurs, the search for funding will often start close to home – with wealthy friends or family. Outside of your inner circle, there are still plenty of opportunities for angel investment. But when partnering with someone you don’t know, it’s always useful to recognise what kind of angel you would like to work with, as there are lots of different types. Here are some of the most common:

Entrepreneur angels

Having been successful entrepreneurs themselves, they now back businesses as an alternative way to generate income. They tend to invest the largest amounts for startups.

Enthusiast angels

Unlike the entrepreneur angels, enthusiast angels see investment opportunities as more of a hobby. These angels tend to be in their later years, looking to make smaller investments across a number of companies. As this is ‘just for fun’, they won’t take an active role in managing the companies they invest in.

Corporate angels

Having previously come from a senior position at a large corporation, corporate angels are looking for profitable investment opportunities – which also comes with a job. As part of the deal, these angels are after a paid position, and are therefore typically involved in just one investment at a time.

Micromanagement angels

Micromanagement angels have typically found success through their own ventures and efforts. In return for their investment, they would expect a place on the board. From this position, they won’t look to reinvent the wheel – employing the same strategies that they’ve used with their own previous companies.

Professional angels

These angels are professional doctors, lawyers, accountants, etc. who invest in companies from within their field. They may even offer their services to the company at a reduced rate.

Benefits of using business angel investors

When it comes to funding, new businesses don’t always get the same opportunities as more established companies. Angel financing is a great way to help those start–ups gain momentum and grow to their full potential.

Along with the extra money for your business, there are a great number of other benefits that come with working with an angel investor:

• They’re willing to take a risk: As angels tend to have an entrepreneurial background themselves, they may have an understanding of what you’re trying to achieve and the risk that entails – but that can mean they are more comfortable taking on that risk themselves. If you can convince them that your idea is worth their money, then they could be open to offering larger sums of money than the bank or venture capitalists.‍
• More than money: Business angels aren’t just offering their money – their pot of gold may also contain experience, knowledge and guidance. Some angels may come with a network of people – other business angels, potential suppliers, distributors or buyers. “It’s not what you know, it’s who you know” is a cliche in the business world for a reason, and angels will be able to introduce you to more of the right people.‍
• There’s no interest: Unlike standard loans, most angel investments are interest–free and don't require monthly repayments. Even if your business never takes off, you won’t be expected to pay back the funds. With a business angel, you instead have the agreement of an investment in exchange for a stake in your business. And if your business turns into a roaring success, then you both get to enjoy the benefits.

Disadvantages of business angels for startups

Angel investment can be powerful, but it’s not without trade-offs. The main drawback is equity dilution. You give up a portion of ownership in exchange for funding. Over time, this can reduce your control and share of profits.

Other potential downsides include:

• Misaligned expectations: Angels may push for growth or exits that don’t match your timeline
• Founder pressure: Taking money from an individual investor often creates a personal sense of accountability
• Time-consuming process: Building relationships, pitching and negotiating terms can take weeks or months

It’s important to weigh up whether equity funding is the right path or whether other options like loans or grants could meet your needs without giving up ownership.

How to find the right business angel for your company

Finding the right angel investor should be about more than just securing funding. The goal is to build a partnership with someone who understands your vision and brings added value to your journey.

It’s worth keeping in mind that many angels will prefer to meet face–to–face and hear pitches, but there are plenty of great online resources that can help you get started with your search right away:

• UK Business Angels Association The UKBAA has the UK’s largest directory of early-stage investors, advisors and intermediaries. So if you’ve wondered how to find angel investors for small business, this could be a great place to start. And with the directory, you can do your research on them first before approaching them with your idea.‍
• Angel Investment Network: On platforms like this, you can upload a pitch and connect with a global network of potential investors.‍
• Crowdcube: Crowdfunding sites may not be your first port of call. But 45% of business angels invest on or alongside crowdfunding platforms. And you could be their next opportunity.

The right investor will not only believe in your product, but also align with your values and goals. Look for someone who’s invested in similar businesses, understands your market, and has time to support your growth and not just write a cheque.

What do business angels get in return for their investment?

Angel investors receive equity (shares in your company) in return for their capital. Their return depends on the business growing in value over time, ideally leading to an exit such as an acquisition, IPO or buyout.

Along the way, they may also benefit from:

• Tax relief through schemes like SEIS and EIS
• Influence in key decisions if they take a board or advisory role
• Personal fulfilment from mentoring founders or backing industries they care about

Since angel investing is high-risk, they typically aim for big returns from a small number of successful ventures, knowing many will fail.

How to pitch to business angels and secure funding

To pitch to angel investors effectively, you need more than a slick deck—you need a compelling story, a credible plan, and confidence in your numbers.

Here’s what most angels want to see:

• A clear and urgent problem you're solving
• A scalable product or service with market demand
• Early traction, even if small (customers, revenue, waitlists)
• A strong, coachable founding team
• A defined route to return on investment

Keep your pitch clear, concise and focused on what matters: the opportunity, the ask, and why you’re the team to deliver. Personal chemistry counts—most angel investments are based as much on trust as numbers.

Real-world examples of businesses funded by business angels

Many well-known UK startups got their first break thanks to angel investors:

• GoodBox, a contactless donation platform, raised angel funding from Andy Murray to expand its reach across the UK charity sector
• RobinAI, an AI-powered legal tech company, was backed by Tom Blomfield (founder of Monzo)
• Sidekick, a wealth management app, received investment from the co-founder of Gumtree to support its launch
• Koyo, a credit-check alternative lender, secured angel backing from Matt Robinson (GoCardless)
• Penny, a pension aggregation app, was funded by the founder of fintech unicorn Payhawk

What are the alternatives to using angel investment?

Angel investment can be a powerful way to raise capital, especially in the early stages of growth. But it’s not the only route available. Depending on how quickly you need funding, your risk appetite, and whether you want to keep full control of your business, there may be other finance options worth considering.

Startup business loans

Startup loans are debt-based, meaning you borrow a fixed amount and repay it over time with interest. These are typically government-backed or offered by alternative lenders.

Unlike angel investment, loans let you retain full ownership of your business—but you’ll have fixed repayment obligations, which can be risky if revenue isn’t yet stable. Angel investors don’t expect regular repayments, but they do take equity, which means giving up some control.

Crowdfunding

Crowdfunding allows you to raise smaller sums from a large number of individual investors, often through platforms like Seedrs or Crowdcube. This can be either equity-based (selling shares) or reward-based (offering a product or perk in return for funding).

While it can be a great way to build early support and test demand, crowdfunding campaigns take time and require strong marketing. Angel investment is more targeted and can move faster once you’ve built the right relationships.

Venture capital

Venture capital (VC) is often the next step after angel investment. VCs invest larger amounts—usually in businesses that are already scaling and need capital to grow quickly.

VC firms tend to be more structured, with formal reporting and growth targets. Angels, by contrast, are more flexible and often get involved earlier, providing mentorship as well as capital.

Grants

Business grants are non-repayable funds provided by public bodies or innovation schemes. They’re highly competitive but can be ideal for R&D-heavy businesses, especially in tech, sustainability or healthcare.

While grants are attractive because they don’t require equity or repayment, they often involve long application processes and strict eligibility criteria. Angel investment can be quicker and less prescriptive, though it does mean giving up a share of your business.

Bootstrapping

Bootstrapping means funding your business yourself—through personal savings, early sales, or reinvested profits. It gives you full control and avoids debt or dilution.

The trade-off is speed: growth can be slower without external backing. Angel investment allows for faster scaling, but comes with shared ownership and expectations around return on investment.

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Business Angel Investors FAQs

What’s the difference between angel investors and venture capital investment?

Angel investors are individuals who invest their own money in early-stage businesses, often before they have significant traction. Venture capital (VC) firms invest larger sums on behalf of institutions, typically in startups that are already growing fast and ready to scale. The key differences lie in the amount invested, stage of the business, and level of involvement.

While both provide equity funding in exchange for a share of your company, they serve different purposes in the startup journey. Angel investors often bring hands-on support and mentorship, whereas VCs usually focus on rapid growth and returns at scale.

In many cases, startups begin with angel investment to get off the ground, then raise VC later to scale. Choosing between them depends on your current stage, growth ambitions and appetite for ownership dilution.

Are business angel investors regulated?

There is a regulatory framework which is there to protect both angels and entrepreneurs. Before a pitch is accepted, or business plans are passed, you should make sure that your investor has self–certified as either a High Net Worth or Sophisticated Investor, as defined by the FCA under the Financial Services and Markets Act 2000.

What is a business angel investor network/syndicate?

A business angel investor network is a collection of angels who can meet, discuss opportunities and invest in businesses. Sometimes networks are specialised by region, or sometimes by industry.

When angels are organised in this way, it makes it easier for them to make joint investments with other like-minded investors – allowing them to share the risks as well as the rewards.

More on business funding options

• Start up funding options
• Alternative business funding
• Peer to peer lending

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