Expert commentary on Technology & Digital
Angel investing from start-up to scale-up
Jenny Tooth OBE, Chief Executive, UK Business Angels Association
Angel Investors have backed many of the UK’s successful entrepreneurs, bringing both finance and experience to support their growth. Yet the angel investment finance landscape in the UK has changed significantly over recent years. Many more investors have entered the market, driven through a range of developments, including policy initiatives such as the Seed Enterprise Investment Scheme, as well as the rise in equity crowdfunding and online platforms.
Another important trend is angel syndication, supported by initiatives such as the £100m Angel CoFund and new regional co-investment funds. Syndicates enable angels to pool their finance and skills to bring much larger investment sums to entrepreneurs, including leveraging further finance rounds.
“We recognise that it is not sufficient to only mobilise angel investment, we need to ensure that all of the sources of finance are connected”
Angels are also co-investing alongside many different sources of finance, including crowdfunding, venture capital funds, as well as debt instruments and innovation grants. This enables angels not just to be there at the start-up but to have the capacity to continue to support the business through its growth cycle, and in some cases through to acquisition, or to an IPO.
40% – The proportion of angels that are under 45 years old
A further change is in the face of angel investing here in the UK. Over 40% of angels are now under 45 years old, as revealed in our research ‘Nation of Angels’ (January 2015), which UKBAA carried out with the Centre for Entrepreneurs and the Enterprise Research Centre.
The research also showed that there are still too few women angel investors – they represent only 14% of the overall angel population. Another exciting development is an increase in the number of successful entrepreneurs who have gone on to become angel investors, bringing finance and experience into the next generation of growth entrepreneurs.
Yet, with all these opportunities and developments, there is a need to bring many more individuals into the angel market, especially outside of London and the South East, where the market remains patchy. However, at UKBAA we recognise that it is not sufficient to only mobilise angel investment, we also need to ensure that all of the sources of finance are connected across the country.
We must all work together to ensure that there is an effective finance pathway to enable entrepreneurs across all the regions in the UK to achieve their full growth potential and become the global success stories of tomorrow!