The commercial loans were main financing source for businesses in Europe and Latvia till 2008. The alternatives like business angels and venture capital therefore covered the minor share in the market. Banks have used their traditional conservative approach and asked for collateral from small and medium sized enterprises as well and therefore it is important to have sound credit and business record for every borrower. Review of Latvian lending practice shows that it is almost impossible to comply with all standard banking requirements not only for start-ups with their innovative business ideas but even for recognized companies with sound background. In order to improve competitiveness and sustainable growth rate for economics, it should be supported and alternative financing instruments should be used. The authors have recognized the importance to develop export-orientated and innovative production and therefore the business angels should be recognized as very potential providers of finance. Research has reviewed business angels’ activities and experience abroad and the financing infrastructure model for financing of SME’s has been provided. The experience of seed-stage financing in USA and Europe shows successful patterns and could be used as example for Latvia. Analysis of business angels investment activities in high risk projects gives a lot of important ideas for domestic players. The main conclusion relates to importance of general infrastructure for business angels which should be designed by all involved parties which are looking for well-functioning business environment in Latvia.