The term "business angels" describe those private investors who invest directly in unquoted companies in return for equity and often also a seat on the board. Their investments tend to be relatively modest, usually for sums of less than £50,000. Their funds are often vital to many start-up or developing companies who require small amounts of capital to develop further but discover that the capital required exceeds that available from banks or personal sources whilst remaining unattractive to traditional venture capital sources.
Capital therefore can only be sought from unknown investors, almost certainly necessitating advertisement to the public. Under financial services legislation, such advertisements must be issued or approved by authorised persons so as to ensure they are, inter alia, made responsibly. However, engaging authorised corporate finance professionals often incurs disproportionately large costs when compared to the amounts being raised. Consequently such
