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Every start-up business needs its angel

29 September 2015 / 10:09:09  GRReporter
3434 reads

Ivan Petkov

Nikolay Mavromatis is a financial manager of a start-up company and has 8 years of experience in finance. Over the years, he has worked as a financial analyst in one of the biggest Bulgarian holding companies. He has experienced the successes and failures of having a private business. He knows what it means to start from scratch and how big the risk to fail is - lessons that he considers especially valuable. In 2008 for the first time he conceived the idea of ​​an organization to bring together business angels in Bulgaria. He decided to implement it alone but failed and returned to the world of corporate business to gain more experience. In early 2015, he returned to the establishment of a network of the Bulgarian business angels, but this time he had an established team behind him. They decided that it was the right time to re-start the idea and to implement it in a way they wanted things to happen and now they are standing behind the newly-established Bulgarian Association of Business Angels, with all the experience and zeal for success that they have gained over the years.

What exactly does the term "business angel" mean? What kind of people are business angels, what businesses do they come from?

The term "business angel" is not unknown for a certain circle of people in Bulgaria but the general public is unaware of its meaning and what hides behind this term. There is no single definition, so we use two definitions that are popular among international organizations and networks of business angels. According to them, these are people who have significant financial resources, professionals and entrepreneurs who invest personally their own assets and resources in new and emerging businesses. In the majority of cases, they provide not only their own capital but also their network of contacts, the managerial skills they have acquired and mentoring, which is extremely important for the development of a start-up business. In most cases, they bear the risk themselves. They invest in the company in return for a stake in it and bear the loss in the event of unfavourable development of this company. Accordingly, if it is successful, their profit is proportional to the share they hold in the company. The main difference between business angels and venture investment funds is that business angels invest personal funds without operating with the money of other people or financial institutions. Business angels have a more personal attitude, as I call it, to entrepreneurship than those funds. I am not saying that the funds do not have a personal attitude, but when you invest your own funds in an idea and a company, you are much more committed to its success. Generally, these are the definitions. Business angels do not invest only to make capital gains from their investment. Some do it to keep abreast with the relevant trends in entrepreneurship in various areas of interest to them and to share their investments with other business angels. Business angels may invest alone or together through the so-called syndicates. Thus, they can provide more capital on one hand and diversify the risk on the other, as they have the opportunity to put their capital into several companies, not just into one. In the syndicates, there are leading business angels who are usually people with a closer knowledge of the industry. In fact, in this society private investors can exchange experiences and ideas, learn to invest together because each of them is good in a different area. The benefit is for investors who discover new horizons for capital investment and entrepreneurs, because they raise capital, which is critical in the early development stages of their company, especially when the company is in the development stage of the idea that underpins it and has no revenues from products. At this stage, it is very important for someone to support you to move on. Both sides have an interest in this process.

Over the last year in Europe, the segment of early investments has included both business angels and venture investment funds. The share of investment is about 7.7 billion euro in investment, 5.5 billion euro of which is due to business angels. The statistics areprovided by the European Business Angels Network, the members of which are 150 organizations of business angels from 50 different countries. In Europe, there are about 250,000 business angels.

You mentioned the European Business Angels Network. Would you tell us more about it as well as about the organization headed by you? What are your goals and activities?

Tags: Business angelVenture capitalEntrepreneurAssociationProjectsEuropean Business Angels Network
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