# 2.3 Business angels

Business organisations with ambitious and, thus, risky projects (think for example about a start-up, or an early stage investment) might need to rely on other unconventional forms of external long-term funding: they could need the help of ‘venture captains’ or even ‘angels’.

According to the UK Business Angels Association (UKBAA), business angels (or BAs) are certified wealthy individuals with an income in excess of around £100,000, or net assets above £250,000 excluding pension and residence. BAs make use of their private funds to invest a variable amount of money (usually between £10,000 and £150,000) in small businesses in which they see strong potential for growth.

In general, when BAs decide to invest in a project, they buy some share of the business, thus becoming part of the ownership structure. This is why funding from BAs falls under the category of ‘external equity finance’. The ‘angels’ do not usually sit on a business’s board, but they do provide continuous support and consultation to help the company grow.

In the European context, currently the UK system stands out as the major beneficiary of BA involvement in the funding of growing businesses. Also, in Spain, Germany, Turkey, France and Russia, BAs account for a considerable amount of investment.

OpenLearn - Organisations and the financial system
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