Should you raise angel investment?

Angel investment is just one way to fund your business but it can also be one of the few options for certain types of businesses at certain points in their journey, making it a critical ingredient for the success of a startup.

Giving up ownership
Are you happy to give away part ownership of the business? This may be an obvious one, but it’s really important to consider seriously. When you take in angel investment you are parting ways with a portion of your business and potentially changing the course of the business direction as you now need to think about not just what you want for the business, but also what is in the best interests of shareholders.

How much can I raise from angel investors?
The amount raised from investors tends to be between £10k to £500k. However there is no set rule, there have been startups who have secured a 5k investment and some who secured £2M from an angel investor. It is common for a first raise to be £150k because this is the maximum amount you can raise under the government's Seed Enterprise Investment Scheme which gives your investor 50% tax relief.

Good reasons to raise angel investment

• You need funding to fuel the growth of your business

• You need funding to develop the product/ service

• You have a clear revenue milestone you want to achieve and need capital to help you get there

• You need expertise and contacts as well as money

Bad reasons to raise angel investment

• You’re not making enough revenue and could do with more money in the bank

• You need funding to pay back debt

• You need to pay for something you don’t have the cash for

You may want to read - is my business investable to get the other side of the story.