Networks

Definition of a Business Angels network

A Business Angels network is an organisation juridically organised which can put in contact potential investors and entrepreneurs. Its general goal is for Business Angels to make investments and to attract regional entrepreneurs looking for funding.

France Angels federates different types of Business Angels networks bringing together individual investors with different goals and various ways of working and investing.

The different possible organisations existing in France :

1)    Associative networks: structures devoted to put into contact entrepreneurs/investors. Generally, the structure organises regular meetings to present selected projects (3 or 4) to a group of potential investors. It costs little for both entrepreneurs and investors to access this device: there is no deduction on the capital raised. These devices are mainly meant for projects requiring low sums of money (usually less than 200.000 €). It usually includes local devices (in a department or region) which are open and visible and these networks do not expect to benefit from the relationship. The Business Angel member of such a network can freely choose to invest or not in the presented projects.

2)    « Investment Society » networks :

    Two kinds of goals :

• some Business Angels (especially in limited numbers, between 10 and 20) wish to stay « among them » and are not looking for a high regional visibility. Thus, they accept to put their money in a « common pool »,

• some networks wish to acquire, in addition to the associative structure, a common pool allowing them to complete investments made by individual BA.

In order to create an Investment Society, it is necessary to implement strict rules of functioning (Board of Directors, Chairman, etc.) and of investment decisions (investment committee). Its members must be very disciplined but it is very efficient as it leads to quick decisions of quality and allows investors to multiply their investments and diversify the amounts invested. 

Two kinds of legal structures :

• The SA/SAS (joint-stock company/simplified joint-stock company) allow you to benefit from IRP & ISF tax relieves (income and wealth tax relieves) when the holding company invests in eligible Small and Medium-sized Enterprises,
• The SA/SAS « option fiscale SCR » (Venture Capital Company tax scheme) allowing you notably to benefit, when stockholdings are resold, from a tax exemption on capital gains. 

3)    Mixed organisation: Association + Investment Society. More and more networks which have experienced separately both the associative structure and the Investment Society structure come to the conclusion that a two-fold structure (Business Angels being members or not of both structures) holds many advantages. The associative structure allows an easier « cultural integration » for the new Business Angels with less experience, provides diversified communication actions in order to recruit new members and to systematically put them into contact with entrepreneurs looking for funding. In an Investment Society structure the decision-making process is organised and decisions are taken collectively and with rigour. It also brings together more Business Angels, both active and passive.

4)     Another form: clubs

    It is generally not juridically organised and difficult to identify and bring together potential investors who are friends or with have the same professional expertise. They do not intend to be visible, are usually more exclusive and it is difficult for new members and entrepreneurs to join them. Clubs’ potential level of investment fluctuates greatly according to their members’ goals but can be important if the club is made of « wealthy »Business Angels.

Why join a Business Angels network if you are a Business Angel?

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• for an easier and larger access to more interesting and original projects as a network regionally attracts entrepreneurs looking for funding,
• to share competencies and expertise with other Business Angels,
• to analyse and study projects with other Business Angels in order to lessen risks of judgment about projects and entrepreneurs,
• to eventually invest in a project with other Business Angels, allowing you to either invest in bigger projects or in a larger number of projects and thus lessen individual risks.

How to create a Business Angels network?

The creation of a Business Angels network is very specific, in particular in a region, and must be adapted to every specific case. Thus, France Angels provides its know-how and contacts in order to facilitate the creation of such a network.

France Angels notably offers you a method which proved to be successful: information day, public conference, technical support for the initial team.

For more information, do not hesitate to contact us contact@franceangels.org.