Investing Capital

Become an online angel investor and diversify your portfolio.

With the start of a new year always comes the inevitable lists of often unattainable resolutions. Instead, why not look at trying a new version of something you are already familiar with? 

Broaden your investment strategy and become an online angel investor. 

Investing online is very much like traditional angel investing. In fact, the process is fundamentally the same - you invest an amount of your choice into any start up, early stage, or established businesses that meet your personal criteria, receiving available tax relief (where applicable), and watch as the business matures, ideally growing towards and achieving a successful exit, whereupon you receive the appropriate return on investment.

The beauty, therefore, of taking the process online is that it offers you a wider and larger choice of businesses than you perhaps have access to offline. 

And there certainly are a lot of businesses out there for you to see! In fact, Business Quarter recently published news of a record number of start ups in 2014. Was there ever a better time to see what's out there waiting for you?

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Every day, a new start up is born and every day, any number of those, along with early stage and more established businesses, decide to raise growth finance. They can do this in a number of ways, such as pitching at specialised events, approaching banks, or conducting online equity crowdfunding campaigns (which is where the focus of this post lies).

There are a number of platforms which have been developed exclusively for the running of equity crowdfunding campaigns and online angel investing.

Each of these start up - and larger - investment opportunites has its own page on the platform, which the business owners use to present potential investors with all the information and supporting documentation they need in order to make their decision.

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Just as should have been the case when you have been pitched to face-to-face, you should have access to the company's business plan, financial forecasts, and investor presentation. Most platforms will allow you to contact the business owner directly to ask any further questions.

A useful feature of online crowdfunding platforms is that you can search for investment opportunities by sector, meaning that you can "stick to what you know" when investing.

For example, if your area of expertise is in leisure and hospitality, you should be able to find numerous start up, early stage, and established businesses in that sector who are looking for investment. Then, following due diligence, you should be able to add some fantastic businesses to your diversified investment portfolio.

Rounds close out quickly through increased syndication.

Co-investing alongside either one angel, or a network, is probably something that you're used to doing. It's often a necessary procedure in order to ensure the round closes out successfully, but there can be a lot of to-ing and fro-ing, often due to the disagreement or bargaining of terms, etc. 

Perhaps the most annoying thing is when an angel decides to pull out; if a replacement can’t be found, the investment doesn’t close out.

The very nature of crowdfunding is that the crowd are involved. Each person donates anywhere from £100 upwards and the number of investors can range from 2 to 2000 (and sometimes more!). Therefore, if one person pulls out, it’s more likely that the now-missing investment amount can be covered and the round will successfully close out, meaning that the entrepreneur can get started on their business’ growth and working towards their planned exit.

This is great news for you as it means that potentially, you could receive a return on your investment sooner than anticipated.

To find out more about equity crowdfunding and its viability as a co-investment strategy, please click here.

Equity crowdfunding's success as an investment strategy in itself, as well as its place in the alternative finance marketplace as a whole, has already been proven by its rapid rate of growth in just a few short years.

The main benefit of investing in businesses online is the fantastic tax incentives that come with it. The Seed Enterprise Investment Scheme (SEIS) and The Enterprise Investment Scheme (EIS)  have been set up by the government to allow investors to receive up to 78% tax relief on their investments. Not familiar with it, or want to find out more? Download our ebook:

View our live tax efficient investment opportunities

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Creating Value.
Delivering Impact.

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Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.