Every startup, especially in its early moments of life, needs a little push on its path to success. A key figure in this push is the business angel, or angel investor, one of the best partners you can find for your company. But, what is a business angel exactly? What do they do and how do they help your startup? In this article, we’ll tell you everything you need to know about your new guardian angels.
Business angel: what it is and what it does
Business angels play a crucial role in the business ecosystem. They are individuals with high purchasing power who invest their own capital in third-party emerging ideas and startups. In return, they generally participate in the profits that the company can generate.
However, angel investors do not only provide funding to new startups. They also offer their knowledge about entrepreneurship, their experience in the business world, and their network of contacts so that the startup can begin its own networking.
In short, business angels are a fundamental figure for the development of an emerging startup, as they will not only provide the necessary funding for the project but also the training, experience, and contacts that the new entrepreneur may need.
How much does an angel investor invest?
Now that you know what a business angel is, you may be wondering: “What investment can I expect from them?”
On average, this figure typically invests between €5,000 and €50,000 in startups, according to data from El Confidencial. However, this investment will depend on several factors, the most common being:
- The stage of the project: If the startup is in the pre-seed or seed phase, the business angel will invest a larger amount to help boost the project.
- The sector of the startup: A startup in the technology sector may receive larger amounts than one in the ecommerce world, where expenses (and, therefore, investment) are usually lower.
- Growth potential: Business angels are particularly attracted to projects with high scalability. The more they can grow, the greater the return on investment will be, and thus the higher the profits for the angel investors.
The business angel in Spain
The Spanish business ecosystem is not the same as that of the United States, for example. Therefore, the figure of the business angel in our country is also different. In Spain, the profile of a business angel is that of a man aged between 35 and 54, with a greater presence in Catalonia and Madrid.
In addition, our country has the Spanish Association of Business Angels, which encompasses agents who make private investments in early-stage businesses. This association includes the majority of business angels in the country, who often belong to other entities. For example, there is the BAN Madrid, the network of investors in pre-seed and seed startups based in the Community of Madrid.
Examples of famous business angels
Normally, the profile of angel investors is anonymous, but in the business world, there are some famous business angels who have achieved great success. Let’s take a look at some of them:
Eneko Knörr
He is considered by many to be “the best business angel in Spain” and is the founder of AngelClub.es, a club of investors in startups. In the last year, Eneko achieved a profit of €1.5 million by investing in three different startups, with a return of 2200%.
Peter Thiel
Co-founder of PayPal, Thiel has backed numerous successful startups, including Facebook. His approach goes beyond capital, providing disruptive ideas and a unique strategic vision.
Elon Musk
Perhaps the most well-known of those we will mention here, the visionary has gained more notoriety by buying the social network Twitter and transforming it into X. In his role as a business angel, he has invested in small technology and energy companies.
Sheryl Sandberg
The COO of Facebook has backed several new companies, contributing not only capital but also her experience in leadership and technology.
Waima, your (guardian) angel investor
“Business angels” are not just individuals; you can also find companies that invest in your ideas! One of them is the startup accelerator Waima, which offers services for early-stage companies, including funding and technological development.
If you are looking for a partner for your business, we can help you!