What is a business angel?
A business angel is a person who is able to invest time and money in supporting innovative unlisted companies (start-ups). It invests its own capital in start-ups in the seed stage in exchange for a stake in the capital of these companies. Business angels are regularly successful entrepreneurs, executives/senior executives of large groups, mid-caps, scale-ups, or seasoned professionals who have experience and knowledge in one or more fields or in a particular sector.
Its role, values and missions
The main role of business angels is to provide financial, but also strategic and operational support to entrepreneurs and young companies. They are above all business and/or sector experts who have a common objective: to support ambitious projects towards success. To do this, business angels provide start-ups with:
Funding : Business angels provide significant financial support to start-ups at times when they are struggling to secure bank loans or larger venture capital investments. They finance projects from €50K-€100K and up to €1M-€1.5M for the largest investors, and this in rounds ranging from a few tens of thousands of euros to €3M-€4M (excluding bank levers or public aid schemes). These are investors who have become essential on a capitalization table, thus making it possible to balance and clean up the governance around the management team.
Mentoring and advice: in addition to financing, business angels often offer valuable mentorship to entrepreneurs, by sharing their expertise, experiences, and professional networks. They can help founders avoid common mistakes, navigate through operational challenges, and make strategic decisions. They mainly bring skills in commercial deployment and business strategy, governance issues, industrialization and internationalization.
Polymorphic networks: These can open doors, network, and facilitate business opportunities for entrepreneurs by introducing them to other investors, potential partners, customers, or industry experts.
Long-term commitment: Unlike some institutional investors who are looking for short-term returns on their investment, business angels are often willing to make a long-term commitment to the companies they finance. They can stay involved for several years, offering ongoing support and helping teams reach their full potential. Although they keep the exit in mind, they are all motivated by the entrepreneurial adventure, and ready to take up the challenges of time and growth with the leaders.
Market positioning
There are several categories of business angels, each with its own characteristics and operating methods:
Among them, business angel networks stand out as historical professional structures bringing together individual investors sharing a common philosophy of investment and support. Notable examples of these networks include Paris Business Angels (PBA), Angels Santé, BAdGE or YEAST, which are affiliated to the France Angels Federation, bringing together about sixty networks and more than 5000 business angels in France. These networks offer a structured framework for investors (training, best practices, dealflow, analysis and investment process, etc.) and start-ups with opportunities for collaboration between investors.
Private investment clubs, or club deals, have gained popularity over the past two years in the French entrepreneurial ecosystem. Players such as Roundtable, Side Angels or Blockpulse have helped to democratize these clubs, offering "small holders" the opportunity to engage in structured and diversified investments. These club deals allow individual investors to benefit from collective expertise and share investment risks and opportunities.
Super angels represent another notable category, often being renowned investors who operate mainly through their family offices. Their involvement in the financing of start-ups can bring additional credibility and open doors for young companies (Patrice Thiry with Tomcat Invest/Factory, Marc Menasé with Founders Future, Charles-Antoine Morand with Karot Capital, Thierry Petit with MadeForAll, etc.).
Finally, independent business angels also play an important role in the entrepreneurial ecosystem. Although their financial contribution may be less substantial than that of other categories, they often offer greater flexibility and agility in their investments. They can intervene individually or collaborate with other investors via crowdfunding or crowdequity platforms such as Sowefund, Tudigo or Lita.co, or join club deals to benefit from greater diversification and synergies with other investors.
Business angels play a crucial role in the entrepreneurial ecosystem in France. Their proximity and long-term commitment to young companies set them apart from other players in the ecosystem. Business angels take "risk" where other players in the ecosystem (VC) cannot afford it (in theory, who says risks, says high possible gains at the exit: high risks/high rewards).
