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The Business Angel

Presenter: Welcome to this week’s programme. I have with me in the studio Mark Fletcher, a business angel. Mark, can you explain what a business angel is?

Mark: Yes, well it sounds like someone who is altruistic, but in fact a business angel expects to make a good return on their money. We usually invest in start-ups and small business looking to expand. When the company does well we expect our capital back with a substantial return. Sometimes we group together to make a syndicated deal.

Presenter: How do these investments differ from bank loans?

Mark: In my case I like to lend between ten and a hundred thousand pounds to a business. I don’t charge interest, so I’m taking a risk with my money. But within five years I expect to get a good return on this investment – about fifty or 60 percent.

Presenter: How do you get your money back?

Mark: The company either raises money by floating on the stock market, or is sold. I will have an agreement with the owners as to how much of the money raised goes to me.

Presenter: How do you find a company to invest in?

Mark: I belong to a network of business angels, and business owners contact us to find an investor. Typically, they give a presentation to a group of prospective investors, and if anyone likes what they see, they put money into the business.

Presenter: How do you decide who to invest in?

Mark: I go very much by gut feeling. Of course I need to see business plans, but if I think the company is producing something that there’s a market for, and if I think the owners have the drive and ambition to do well, then I’ll put my money in.

Presenter: Are all the businesses you invest in successful?

Mark: (laughs) No, of course not. If I invest in ten companies, I expect three or four to go bust, two or three to do OK and a couple to be really good. Those are the ones I make my money on. Earlier this year I got back ten times the amount I’d invested in one company. This makes up for the investments where I make a complete loss.

Presenter: And once you’ve invested your money, is that it or do you have any further involvement in the company?

Mark: I’m very much a hands-on investor. Before I became a business angel I ran several successful businesses which I then sold on, so I’ve got plenty of experience and I like to help companies develop and expand. Sometimes I’ll expect to become a director of the company. Other times I concentrate on giving financial advice. The great advantage is that I can see what is happening to my money.

Presenter: Thanks very much, Mark. Now if anyone is interested in contacting a business angel, you can find out more on our website.