Get ready to groan

A national newspaper recently started an article as follows:

“Having two TV Dragons fighting it out to invest in your business may signal to some inevitable fame and fortune”. This was followed by a rather dispiriting story of a member of Enterprise Britain whose trade had declined. One of the Dragons Den had put in £70,000 for 45% of the equity. However the Dragon does not seem to have featured significantly once the downturn became apparent.

Of all the terms used in Enterprise Britain terminology ‘Business Angel’ (which is what the Dragons Den are) is the one which utterly fails to convey its true meaning.

‘Business’ is defined as ‘serious work’.

True but not for the Angel who expects to make an investment at a ludicrously undervalued figure in the expectation that the entrepreneur will flog him/herself to death making the Angel even richer.

‘Angel’ is defined as ‘kind or innocent person’.

Forget that. Virtually no Business Angel I have met comes anywhere near that definition. They are more often avaricious, self satisfied, self centred egotists.

Question: “How do recognise a Business Angel?”

Answer(s):a. They never stop talking
b. They are patronising and self-indulgent
c. They have their first gin and tonic (“a large one please bartender”)at around mid-day
d. They rarely write out cheques

It is quite barmy that Business Angels (aka Dragons) are able to dish out corporate advice willy nilly without any responsibility when the Finance Services Authority (“FSA”) regulates the rest of the market with an iron tight grip.

The clever Business Angels (and there are some really astute ones out there) usually tie up a deal (on the odd occasion they write out a cheque) with a shareholder’s agreement. This is often so one sided that the business owner will need the Wisdom of Solomon to survive.

The world of Business Angels is murky and unpleasant. It is often the first attempted step a member of Enterprise Britain will attempt to take when the debt sources have dried up.

Underpinning these weekly blogs on Enterprise Britain is the objective of defining the problems faced by growing companies and providing solutions. This will culminate in the publication of a booklet titled ‘The Revival of Enterprise Britain’.

It will contain a solution to the issue of providing entrepreneurs with professional and economic corporate finance advice. It will force Business Angels to approach their work more professionally and even-handedly.

Business Angels can play an important part in our story. Some today try hard and offer solutions. Far too many don’t.

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