My finances, my projects, my life
April 18, 2019

Get your company off the ground with the help of a business angel

  Compiled by myLIFE team myCOMPANY March 12, 2018 464

So, you’ve decided to start your own business. You’ve got the dream, the drive, the contacts and a sound business plan. Now all you need is the financing. There are several different bodies you can turn to for support, including the Chamber of Commerce (Chambre de commerce), the Chamber of Trades (Chambre des métiers), a bank or even the government. But have you considered getting help from a business angel? Let’s have a look at what they can do for your business.

What is a business angel?

A business angel is someone who invests their own money into innovative start-ups to support them in the launch phase. Also known as angel investors, they are often former CEOs or senior executives who have first-hand knowledge of business.

As such, they can help get things going in the early stages of the venture. They may invest substantial amounts of money – generally between 10% and 30% of the capital – either individually or together with other business angels (from the same region, sector, alumni group, etc.). As they are investing their own money, a business angel has the freedom to invest in any sector they wish.

Your very own business mentor

There are many advantages to getting a business angel on board with your idea. Aside from providing the all-important financial backing, they can also share their wealth of skills and experience and give you valuable advice for overcoming challenges.

They can help guide you without taking over the day-to-day management of your business, and can also put you in touch with their own network of experts to help you locate resources like partners, suppliers or new sources of funding.

In addition to providing the financial support […] Their advice can help you avoid business pitfalls, make sound investments and find reliable contractors.

A business angel can bring real added value to a new start-up. In addition to providing the financial support needed to get your business up and running smoothly, they can save you precious time. Their advice can help you avoid business pitfalls, make sound investments and find reliable contractors. Your very own business mentor!

How do I get a business angel on board with my start-up?

Business angels can be hard to come by, so you will have to go all-out to win them over. For the greatest chance of success, you should look for a suitable investor – one who has a personal interest in your project or who has already worked in the same field, for example.

You absolutely have to sell them on your idea, by making an ironclad argument that shows its potential. And for good reason: don’t forget that they’re taking a risk by trusting you and investing in your company. Not only do you need to convince them that your business idea is a good one, but you also need to show them that there is real potential for growth. This doesn’t mean you should oversell your start-up, but that you should provide realistic figures to begin building a relationship of mutual trust.

Conduct thorough market research and draw up a sound business plan. Explain what makes you stand out from your competitors, and how you intend to turn a profit (for the both of you). Estimate how much you will need to invest, illustrate your idea’s potential, present realistic objectives, form a strong team, and so forth. In short, be convincing, while keeping your pitch clear and concise.

What should I bear in mind?

To ensure that your partnership is a success, you need to build a solid foundation of mutual trust. This will mean working together to overcome challenges and hurdles, which can sometimes create tension, or lead to frustration or concerns. If you don’t get a good vibe from someone, don’t go into business with them!

Remember that getting help from a business angel has a price, and it can sometimes be even higher than for a bank loan. Be clear and up front from the start when it comes to share capital and profit distribution.

Remember that getting help from a business angel has a price, and it can sometimes be even higher than for a bank loan. Be clear and up front from the start when it comes to share capital and profit distribution. We also recommend that you sign a shareholders’ agreement, which is a contract defining things like the shareholders’ responsibilities, the share capital and the conditions for withdrawal or liquidation.

Where can I find a business angel?

Still interested in enlisting the help of a business angel now that you know what they can do for your start-up? These rare gems can be hard to find, but we’ve compiled a list of places you can start looking.

The Luxembourg Business Angel Network (LBAN) is a networking platform for private investors and entrepreneurs. It is part of the European Business Angel Network (EBAN).

The Seed4Start platform is a network for business angels that brings together entrepreneurs and investors in the Greater Region, primarily through a large cross-border forum.

nyuko is an incubator and community of entrepreneurs that aims to help Luxembourg become a start-up nation. It provides a range of services that includes putting entrepreneurs in contact with strategic investors.

The Chamber of Commerce’s House of entrepreneurship offers a networking service for start-ups and business angels. It holds specific workshops, conferences and free working sessions on matters of topical interest to entrepreneurs.

Luxinnovation, the National Agency for Innovation and Research, offers tailored support to innovative start-ups in all stages of setting up a business. It also sets out the different private financing options that may be available to them.

Good luck!