Not All Business Angel Networks Are Born Equal

Take a look in the Resources  > Business Angel Networks page of the Meteorical website and you’ll see a list of Angel Networks. There are a lot of them in the UK and this list is not exhaustive. The list includes state sponsored and commercial networks. What are the differences between them? Is there a third, better, type of network for Business Angels? This article compares three types of networks… seems like we’ve already answered the last question!

In the UK Business Angel Networks can be split broadly into three groups. Clearly there is going to be overlap and some slight variation between the categories but the division is useful. First, what are the three types of Angel Networks:

  • State Sponsored. Networks such as Xenos, YABA, etc. receive funding from a government (UK or EU) to sift through applications and present them to their members. They are usually regional since their money comes (indirectly) through the RDA. Their primary aim is to achieve their customer’s goal – in other words, the goals set by the government. The government usually sets Key Performance Indicators (KPIs) such as number of deals, amount of money into the local economy and number of jobs.
  • Commercial. Networks such as AngelsDen, Envestors, Beer & Partners, etc. depend on deal flow for all their income. The income is received from their customers – the companies that they obtain funding for so this is their key aim in life. Most will present deals from anywhere in the UK and since they are more selective the number of deals tends to match the state sponsored networks.
  • Private. Private networks are generally below the radar and run by the angels themselves. Their key criterion is how they are going to exit deals with money. Any costs will be to cover shared resources (so next to zero).  The number of deals reviewed will be very small since propositions will only reach the group if one member is already seriously considering making an investment.

A comparison between types of networks is most easily seen in the following table:

State Sponsored Commercial Private
Angel membership cost £100 – £200pa £100 – £200pa Generally zero
Customer Government Company Investor
Typical number Angels 100’s 1000’s 1-10
Propositions presented 50 per year 50 per year 5-10 per year
Scope Regional National Local
Directly employed professionals Many Some None
Selection Criteria The best they’ve got Most likely to be funded Return on Investment
Goal Most deals & jobs High value deals Exits

As a competent Business Angel you may ask yourself what your goals are for your investment. Given this, you know where to concentrate your time.

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