Are Business Angels Still Investing?

The current lending environment is the most difficult that the majority of businesses have ever experienced. Banks are being understandably cautious as the country enters recession.

Beer & Young, Turnaround Finance Specialists, keep pointing out that raising equity is the best alternative for many businesses. Angel investors have a higher risk threshold than banks and new equity strengthens the balance sheet.

But are Business Angels still investing in the current climate? The high number of our cases that have completed and are nearing completion is clear evidence that they are.

The example below (names have been changed) is one of our most recent completions. Beer & Young have found funding for this undercapitalised business supplying the retail sector.

ABC SUPPLIES

David had worked for 20 years sourcing clothing when he decided to develop his own brands. The business designs and supplies high quality equestrian and country clothing to 250 retail outlets across the UK. When David approached us his position was:

• He had remortgaged his home and injected more than £150,000 into the business which was high margin and profitable.

• The Bank overdraft was £30,000 and would not be increased.

• Debtors were already factored and trade finance facilities had been refused.

• He could not fund his new season stock from the Far East and Portugal.

Beer & Young were contacted from our website and arranged:

• Three investor meetings.

• Two offers of equity investment were received.

• The offer, involved a £230,000 injection of new funding from the investors, a mix of equity and unsecured loan funding.

• An additional funding line of £100,000 will be available dependent on performance.