Business angels

Business angels are usually interested in firms with potential for rapid growth operating in fields where they have experience, and usually prefer firms located fairly close to their home or office.

The tools to activate business angel investment are the responsibility of the Member States, who should create incentives for private investors that are willing to invest in enterprises, including by using public funds to target co-investment with business angels.

Increasingly, business angels are getting together in networks, private or semi-public organisations which help match up entrepreneurs and potential investors. Most networks operate at regional or national level.

The European Business Angel Network (EBAN) represents the European business angel market and networks. It estimates that there are 75 000 business angels in Europe, who invested a total of €3bn in 2006.

The Commission's policy is to identify and spread good practices that can help improve the conditions for business angel investment.

The Competitiveness and Innovation framework Programme (CIP) allows business angels to develop co-investment funds in partnership with venture capital funds. The funds should focus on seed and start-up financing, and the venture capital fund should act as lead partner.

More on early-stage finance

• EASY (early-stage investors for high-growth businesses) is a meeting point for early-stage investors and innovative businesses seeking risk capital from across Europe.
• Gate2Growth is a pan-European business platform for entrepreneurs seeking financing, investors, incubator managers, knowledge transfer offices, and academics. It provides various tools to help to access finance.
• Benchmarking business angels (2002): this expert group report looked at public policy issues and good practices concerning financing by business angels.

Investment readiness

Many entrepreneurs need guidance on the advantages and disadvantages of alternative forms of finance and on how best to present their investment projects to potential financiers. Investment readiness programmes similarly need to build on European best practice.

To this end the Commission in 2009-10 will identify and disseminate good practices that can help in developing high quality investment readiness programmes.

More on investment readiness

• Ready for Equity! project: The first phase of this project (2006-08), funded by the Commission's Leonardo da Vinci programme, identified key obstacles to business angel activity across the European business community. The project developed and tested training curricula for business angels and entrepreneurs. A second phase of this project has been approved and will run until September 2010 to facilitate the rollout of training both for angels and entrepreneurs.
• Investment readiness (2007): A workshop report on good practices in investment readiness training.