A practice that is growing quickly in other European Union countries, becoming one of the major alternative sources of financing, is long overdue here. We are talking about the so-called «business angels,» meaning a network of private investors with the ability and, more importantly, the desire to take risks by investing capital – no more than 100,000 euros in each case – in new enterprises set up by young aspiring entrepreneurs whose activity combines the widespread use of modern high-tech applications with innovative solutions. A more complete definition of this novel scheme is the one supplied by the European Commission. It defines business angels as private investors (one or more per investment) who decide to invest directly in new and growing companies that do not have access to organized capital markets, such as stock markets. This new financial model will be imported to Greece under the initiative of the Economy Ministry’s New Economy Fund (TANEO), which will, within the next three months, set up a specialized subsidiary for the purpose. Business angels usually invest in return for a stake in the company they invest in. However, they may also provide any sort of long-term financing. In order for their investment to bear fruit, they also provide consultancy services by utilizing their experience, their knowledge of the company’s area of activity and their network of connections. Studies have shown that businesses financed by business angels consider their investors’ experience an even more important factor than the financing itself. This financing, TANEO managers say, may be complementary to financing by venture capital companies by providing smaller funds at an earlier stage in the young companies’ development, when venture capital companies appear reluctant to take the risk. That is why business angels are often referred to as «informal venture capital.» In other words, business angels provide contingency financing until the start-up firm has grown enough to appeal to venture capital firms. The latter, TANEO managers explain, «are often unable to provide financing (to a start-up firm) because of the high cost of examining a financing proposal, including due diligence (a detailed examination of the company’s books) and the high risk being undertaken, especially when a company is at its early stages of development.» As the Commission report «Benchmarking Business Angels» shows, the average investment by business angels is 200,000 euros, while such investments range between 50,000 and 750,000 euros. One-third of these investments are made by a consortium of two or more business angels. TANEO managers estimate that business angels could invest an average of 100,000 euros in each start-up company. Mobilizing business angels is done through a business angels network which undertakes to match new companies in need of financing with willing investors. In this way, prospective investors meet with network representatives several times and are also under scrutiny. According to the Commission report mentioned above, Greece and Luxembourg are the only countries among the current 15 EU members which do not have a business angels network. On the other end, the number of active business angels in the United Kingdom is 20,000 to 40,000. They make 3-6,000 investments annually, investing between 800 million and 1.6 billion euros. The Greek business angels network will be open to all Greek businesspeople fulfilling a minimum set of capital adequacy and know-how criteria. Such a network would operate in the following manner. The businesses in need of financing will submit a business plan over the Internet to a portal that is to be created and will be similar to www.gate2growth.com. The business angels network will collect the submissions and provide an initial assessment. Those business plans that fulfill certain minimum standards will be distributed by the network to private investors – individuals or corporations – that have expressed an interest in investing in the particular sector. In case a business angel expresses an interest in a particular business proposal, the network may undertake the due diligence procedure and possibly even the signature of the financing contract. Finally, the network can undertake to draw up the contracts, follow them up and assess them. It will also inform each business angel about the implementation of the business plan following international standards. TANEO managers are currently looking for financing of the project through the EU’s Third Community Support Framework. Each investment may be financed through CSFIII to the tune of 100,000 euros. The Commission will monitor closely the implementation in order to avoid reintroducing state subsidies.