Make an entrepreneur's day (and possibly her fortune)

There are an estimated 150 million businesses currently in the making worldwide, with about 300 million people involved in making them. On average, about two thirds won't even make it to launch, which still leaves about 137,000 successful launches, per day, this year. Many, or even most, of them will fail, but a certain few will become the Airbnbs and Ubers (and Home Depots) of tomorrow. These startups will fundamentally change their sectors and make fortunes for the angel investors who provided valuable assistance to them during the key early stages.1

The business world loves entrepreneurial startups because it's where the inventive and pulse-quickening action is happening. And angel investors seem to love them especially, investing more than €7.5 billion in Europe annually, a number that's still rising. That's more than what is currently being allocated by venture capitalists, suggesting that the importance of business angels to the equity capital industry is nothing to scoff at. What's more, angel syndicates (a group of angel investors where typically one angel takes a lead role) are growing in number and size, perhaps indicating further the strength of angel investment in today's business scene.

Could I be a business angel?

Business angels—let's call them BAs—are private individuals who directly invest part of their personal assets into young, unquoted businesses. They are usually of high net worth and experienced in business, and generally invest smaller amounts than what a venture capitalist would, ranging from as little as €10,000 up to €500,000+. BAs invest at an earlier stage than venture capitalists, and in doing so are often able to forge a relationship with the entrepreneur whereby they provide business management advice and a list of contacts to help the startup head in the right direction. The capital they provide, therefore, is smarter and more patient. What's attractive about being a BA is that you can be more involved in bettering the project's chance for success, which gives you some measure of control over your investment's fate and allows you an additional emotional payoff if and when the project takes off.

Tell me more about these angel syndicates

A best-practice example of an angel syndicate is the Rising Tide Europe 1 programme (RTE1), which consists of 90 successful businesswomen (representing 23 countries). They have combined their assets into €1M and plan to invest it in six to ten early-stage European companies. This type of programme is unprecedented in that it aims not just to invest in startups, but also to educate its members about investing and to develop a global community of angels. Angel syndicates come in a variety of sizes and creeds, but all serve as a way to connect investors to their investments in a more vital way.

What about angel investing in Luxembourg?

A great place to start is the Luxembourg Business Angel Network a non-profit organisation whose mission is "to give the appropriate tools to business angels in order to become better private investors and be more comfortable in making investments."

Other initiatives such as the KPMG Hub for Entrepreneurship (informally "the Khube") are also a source of inspiration and investment opportunities. The Khube recently interviewed one of its own members, a FinTech that's gained traction providing white-label e-payment solutions.

So what's next...?

In many contexts, BAs make up a large source of external funding for new entrepreneurs. In this sense they have a real role in the economy, and with angel investing gaining in popularity, it is to BAs that startups are increasingly looking as enablers of real success.

The Khube has been a front-row spectator—and occasional participant as well—of how FinTech startups are starting to shape the financial scene in Luxembourg and beyond. Fifteen semi-finalists in Luxembourg's first FinTech awards, the FinTech Lion Awards, will be pitching in Kirchberg on 9 May.

So, will you spread your white angel's wings and help an entrepreneur on to stardom?

Footnote

1. Statistics related to business angels in this article are taken from this website.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.