In its essence, in most cases, investments that make Business angels represent private equity/ equity financing.
Business angels are investing part of their own resources and the decision is an individual. Business angel acquires share of the business of the entrepreneur against the equity financing.
Besides financial support from Business Angels, they provide additional advantages for the company in which they invest with personal contribution like: skills, know-how, business contacts and image in order to realize success.
Business angels provide funding ranging from 10 000 to 250 000 BGN. Amounts above 250 000 BGN are usually invested by a group of Business Angels (Angel union or syndicates). The purpose of this group of angels is to jointly provide more funding, to share the risk and collaborate to support the success of a business. Business angels make venture investments in start-up companies, looking for an opportunity for return on investments in their portfolio companies range from 3x to 40x (times) or return between 20% -35% depending on the risk of the project for a period of 3 to 8 years.
Statistically, in a portfolio of ten companies in the seed / startup level, half of the companies do not generate returns, and 3 to 4 companies have zero or very low returns. In most cases, investors expect 3 to 4 companies to generate income to cover investment portfolio, but in reality only 1 or 2 companies can meet these expectations for returns.
Business Angels have to invest only in companies with expected growth in the value of 10x, 20x or 100x and they could expect a return on its portfolio of companies in the metrics described above. In this case, it is recommended to start-up companies that cannot meet these expectations do not apply for such funding.
Business angels could make exit from their investment by: sell the shares to the owner of the company, management team, a venture capital fund shares or exit the company on the st ock exchange(IPO).The goal in this period is the company to develop extremely rapidly, and Business Angel to exit from the investment that has made on profit. In all cases, startups need to be able to demonstrate the potential for significant and rapid growth, which provide the necessary return on venture capitalists.
The investments made by Business Angels are the most significant source of investment in startups and companies in the early stages of the business cycle seeking capital to ensure their growth.
The main focus in Business Angels seeking to invest in startups is on the management team, the business and the project itself, which stands behind the company. Capacities and skills of the entrepreneur and management team are one of the main criteria for investments by Business Angels.
Description of the steps in the process:
1. Fill in the details of the platform GUST. This form is standardized and includes fields that are adapted for the analysis and selection of projects.
2. All relevant and complete projects in GUST are reviewed by a team of Bulgaria Angels. They select startups by specific criteria and present them to members of the association. The selection process is carried out every last week of the month. All companies that are selected receive feedback from the investment board of Bulgaria Angels.
3. Selected projects are shared in Gust platform with all members of Bulgaria Angels who have access to them. Please notice that not all companies that have been selected are invited to make a presentation.
4. Presentation of the projects is carried out in internally event organized by Bulgaria Angels. Startups which will present their ideas are selected by the team of Bulgaria Angels. The duration of the presentations is predetermined. After the presentation startups will receive feedback on their projects. Once accomplished presentation, Bulgaria angels consolidate the opinion of members and inform startups about the next meeting between the parties concerned. In the absence of interest from Business Angels, Bulgaria Angels trying to keep informed about other startup funding opportunities accessible thanks to its partners. Such information can be found in section events.
5. Bulgarian Association of Business Angels is a non-profit organization and does not invest directly in startups. Its members invest in them.
If your startup provokes interest in our members of Bulgaria Angels, we will help you to organize the first meeting with these investors.