How to talk to angels

A pedigree of innovation and an appetite for expensive plant means engineering-based businesses regularly need to find more funding if they are to expand.

There are really only four main options open to any growing business: secured lending such as a bank loan or overdraft; asset-backed finance (using plant or debtors as security); use of the

through one of the clearing banks, with the

as guarantor; or private equity through business angels or venture capital (VC) institutions. However, the first port of call for advice about each of these options is usually a firm of accountants.

Anyone with experience of commercial lenders will know they are a relatively cautious lot, particularly with start-ups, and they are unlikely to share your confidence that your business will succeed.

Likewise, VCs will have strict criteria about making, and managing, any investment beneath a lower limit. Consequently, the only realistic source of venture capital between £100,000 and £2m, particularly for early-stage companies, is usually business angels — private individuals who singly or in groups invest time, skills and money in unquoted companies in return for equity reflecting the risk.