Business angels

Business angel investment is practically a form of venture capital, though it’s implementation is conducted in smaller volumes and through a single investor.

How can we characterise such an investor?

A business angel is an individual investor that uses venture capital to finance prospective small and medium-sized enterprises with outstanding growth potential (generally firms in the seed, start-up or expansion phase of the life-cycle) with the aim of appreciation of the invested funds.

Unlike venture-capital funds, a business angel brings certain know-how to a firm in the form of expert knowledge, orientation in the given field or contacts to strategic partners. As in the case of venture capital, the investment entry is limited to a previously set period, at the end of which the investor undertakes the sale of his share. Business angels thus do not look only for the greatest revenue with a certain level of risk; rather, they look primarily for an area in which they can actively engage and use their experience and contacts to support the company in which they have invested.

Since in the case of business angels this concerns individual investors, they often associate in so-called business angels networks with the aim of more effective access to information and more rational investment of capital. In the Czech Republic, such activities are currently performed by four networks offering to firms that are interested in using financial resources of business angel investors mediation of contacts to their members and services related to preparation of a project for the given investment: