These are questions commonly asked of Aurora Private Equity. If you have a question not listed below, please get in touch.
- What is a business angel?
- Why is business angel investment needed?
- Why join a business angel group at all?
- If I want to invest in an opportunity, how would I do that?
- What are Aurora’s investment criteria?
- How much will it cost me?
- Can I get involved without becoming a member/investor?
Q: What is a business angel?
A: Also known as an informal investor, a business angel is a reasonably affluent individual who alone, or more commonly as part of a group, provides funds for a business start-up. The funds may be provided as a loan but more commonly funds are exchanged for some of the equity (shares) of the business. Business angels may also work with the company on the board or as part of the management team providing advice, support, specialist know-how or business contacts.
Q: Why is business angel investment needed?
A: Angel investment or capital is provided by private investors often as groups which fills the gap in start-up financing between “friends and family” who provide seed funding and venture capital. Although it is usually difficult to raise more than a few thousand pounds from friends and family, most traditional venture capital funds are usually not able to consider investments under £2 million. Thus, angel investment is a common second round of financing for high-growth start-ups, and accounts in total for almost as much money invested annually as all venture capital funds combined.
Q: Why join a business angel group at all?
A: Finding good opportunities that are ready for investment can take significant amounts of networking and research effort. Significant risk is often a feature of business angel investments – some investee companies do not succeed and an investor’s entire investment can be lost. A wide range of knowledge and experience, such as is available in Aurora, helps greatly to appraise opportunities and reduce the risk of a failed investment.
Q: If I want to invest in an opportunity, how would I do that?
A: The simplest way is to join Aurora as a member. Contact our managing agent to find out more or join directly online. You can contact our managing agent at any time. Our managing agent will also send all members details of every opportunity that pass Aurora’s investment criteria – which are also scrutinised by Aurora’s board. Because of the Financial Services and Markets Act, Aurora is not able to send non-members details of investment proposals. Of course, you may do your own research as a non-member and approach companies under your own steam.
Q: What are Aurora’s investment criteria?
A: Aurora looks for opportunities that fit one of two categories: (1). Stellar prospects, possibly pre-revenue, having game-changing, scalable ideas with management teams having superior experience of the market-place committed and able to see the project through. Expected return of more than 10x within 5 to 7 years. Obviously high-risk, high-gain. (2) Great companies with clear market traction and opportunity having established and capable management teams, probably already revenue-earning with concrete plans to exit within 5 years at up to 10x. (3) Good companies, most probably revenue-earning with already successful business model requiring funds to scale up and achieve exit within 3 years typically at 2x the cost of investment.
Q: How much will it cost me?
A: Aurora charges its members an annual membership fee of £200 and a levy of 4% on each individual’s funds placed on each investment. [Aurora investments are made in a fully legally-compliant way, usually under Scots law – legal costs normally paid by the investee company]. The total costs are below the norm for other angel groups. Each member is free to choose his/her level of investment.
Q: Can I get involved without becoming a member/investor?
A: Aurora has established the Aurora Network as a community-of-interest for individuals and organisations who want to be informed of ways in which they can support emerging businesses. Registration is free and personal details will never be passed on to third parties without consent. Individual network members may simply have a general interest in keeping in touch with angel investment, or as with organisations, have a specific desire to participate in suitable opportunities such as mentoring, paid employment, directorships, or providing professional services (e.g. legal, accounting, patent protection,information management).
If you have any other query please contact us.