Business Angel Investments: Risks and Opportunities

Abstract

For the last few years the need of improving the access to finance for the companies, especially SME's (small and middle enterprises), has been on the agenda in European Union. As long as the traditional financing such as bank loans became more complex to attract, the development of alternative investment, like seed and start-up capital investments, crowd funding, venture capital and Business angels, became a bold topic. Moreover, there is an opinion that development of alternative investment might be seen as a ground for boosting economic activity and entrepreneurship development. Even though a lot of various studies have been done on the evaluation and description of alternative investment market this topic, as it is stressed in many cases, still is not jet fully acknowledged. Admitting the importance of alternative investment development in European countries, this study focuses on pros and cons Business angel investors possess. The main object of this paper is recognition of Business angel characteristics and related risks and opportunities company managers should be aware of. It is stressed, that on one hand being a good opportunity for gaining finance resources, Business angels possess risks which should not be underestimated. By focusing on the European market the core elements of Business angel investments will be evaluated.