How to find angel investors in the UK

What is an angel investor?

An angel investor is a high net worth individual who invests their own money in early-stage businesses, usually for a stake in the company.

It’s worth noting there are many types of angel investors, such as ‘super angels’ who tend to have a lot of investments and ‘lead angels’ who usually pool their money with other investors but help coordinate the deal.

The type of angel investor you work with can impact the amount of input or equity they want in your business. 

Unlike venture capitalists or large institutions focusing on established businesses, angel investors often look for startups with big growth potential and tend to work with a company for at least five years. 

Angel investors expect an equity percentage that aligns with their investment. According to Money UK, this percentage is usually 10% to 25%. Many angel investors also bring mentorship, strategic advice, and industry connections that help founders avoid pitfalls and speed up growth.

If you’re wondering, do angel investors make money? They usually do, but it often takes time. Angel investors aim to profit by selling their equity if the business grows or is acquired, which is why they’re drawn to high-potential startups despite the risks.

Are angel investors regulated?

Angel investment is regulated by the Financial Conduct Authority (FCA), so it’s worth checking if any potential investors are regulated and meet the required criteria beforehand. 

Doing so will ensure that your chosen investor can invest in your business. 

Are angel investors a good idea for your business?

There are advantages and disadvantages to angel investors worth considering, which we explore below. 

The pros of angel investors:

• Access to capital: For early-stage businesses with limited financing options, angel investors can provide the funds needed to kickstart your company or expand it.
• Potential mentorship and guidance: Many angel investors bring not only capital but also their experience and professional networks, helping to guide your business, which can be invaluable if it’s a new one. They can also use their expertise and contacts to help you achieve your company’s long-term goals.
• Flexible investment terms: Compared to traditional financing, angel investments often come with more flexible terms better suited for startups. Also, an angel investor can help you attract funding in the future, as their investment can signal confidence in your company’s long-term prospects.
• The business doesn’t need to repay funds or interest: As the angel investor gets equity in the company, the business doesn’t owe interest on any funding or have to pay it back. The angel investor benefits if the business succeeds and grows in value. 

The cons of angel investors

• Less control of your business: Accepting an angel investor often means giving up some control or equity in the business, which can be up to 25%. As an angel investor invests their own money, they may be proactive in the business to drive growth or bring in executives who may clash with your vision. If an angel investor has an exit strategy, you may be encouraged to take certain actions you may disagree with, such as selling your business.
• Meeting expectations: Angel investors generally expect strong growth, and if the business doesn’t meet these expectations, there may be pressure to change direction. It’s worth considering if your company can meet growth expectations before accepting any investment. Some angel investors may want a tenfold growth in their investment within five years.
• They are not suitable for all businesses: Remember that most angel investors look for high-growth potential, which might not suit slower-growth or niche businesses. The investment will likely put extra pressure to deliver, so speeding up growth is vital. 

How do you prepare to approach an angel investor?

If you are looking for an angel investor, use these tips to ensure you have the best chance of securing an investment.

Develop a solid business plan

To attract angel investors, you’ll need a clear, compelling business plan. Start with a strong value proposition: what makes your product or service unique, and why does the market need it? 

Solid market research is also key; it shows angel investors you understand your audience, know the competition, and know industry trends. Before finalising your plan, get feedback from mentors or industry experts who can strengthen it. 

Ensure you have financial forecasts and a valuation

To show angel investors your company’s full potential, you need to prepare solid financial forecasts and a realistic valuation.

Detailed projections of revenues, costs, and profits demonstrate financial viability, while a fair valuation, aligned with industry standards, builds trust and shows you’re serious about the investment and have done your research.

Have a compelling elevator pitch

A strong elevator pitch can make all the difference. Craft a short, punchy pitch that highlights what your business is about and why it’s worth an angel investor’s attention.

In just a few lines, capture your value, unique proposition, and growth potential and ensure it’s memorable.

Where can I find angel investors in the UK?

If you're wondering how to find an angel investor, there are plenty of resources to help you connect. But before you dive in, take a moment to vet each angel investor.

Look into their background, past investments, and whether their goals align with yours. 

Online angel networks and platforms

Platforms like the UK Business Angels Association (UKBAA), UK Angel Investment Network, and SyndicateRoom are good starting places. These networks link startups with potential investors and often provide profiles to assess whether they’re a good match. 

Some platforms are free, while others may charge fees or require a membership.

Networking events and conferences

Attending networking events and conferences is a great way to connect with angel investors. UK events like Seedrs and Startup Grind gather investors and startups under one roof and often feature pitch sessions where founders can present directly to angel investors.

It’s a prime opportunity to make connections and promote awareness of your business. 

University and incubator programmes

For anyone looking for angel investors, UK universities and incubators (an organisation that helps new and early-stage businesses) are worth considering.

Many of these institutions run programmes specifically for early-stage businesses and frequently hold pitch sessions, where founders showcase their ideas to a network of angel investors.

It’s a great way to gain exposure and make valuable connections.

LinkedIn and social media

Don’t overlook LinkedIn and other social media platforms when finding angel investors. By searching for investors with a focus on your industry and engaging with their posts, you can start building rapport.

This approach helps you make meaningful connections that could open doors to funding opportunities in the future.

How to approach and attract angel investors

Once you have prepared for angel investors, you must connect with them.

Craft a personalised pitch

Crafting a tailored pitch is key to standing out with angel investors. Take the time to research each investor’s background, preferences, and investment history.

Personalising your pitch shows you’ve done your research and are serious about building a strong partnership. 

Demonstrate traction and proof of concept

Proof of concept is everything when building confidence with angel investors. Show them there is strong demand for your product or service with solid evidence, such as sales data or user engagement.

This reinforces your business’s potential and reassures investors you’re on the right track.

Be transparent about the risks and rewards

Being upfront about the risks and rewards is key to building trust with angel investors. When you honestly address potential challenges and lay out a clear exit strategy, it shows you’re realistic and prepared for the road ahead.

This transparency makes your business more appealing to a potential angel investor.

Get expert financial advice

Finding the right angel investor takes time and preparation, but the potential rewards, such as funding, guidance, and valuable connections, can be transformative for your business.

With a solid plan, a compelling pitch, and research, you’ll be well-equipped to attract investors who share your vision and are ready to support your growth.

Let Unbiased match you to a professional financial adviser ready to support your growth and goals.