I’ve been reading the 2015 UK Business Angels Association report on “A Nation of Angels: Assessing the Impact of Angel Investing Across the UK” and thought it might be useful to share some thoughts from the Report as well as some recent updates on the business angel market in Scotland.
A few highlights from the Report:
• Private investors account for between £800m and £1bn of investment in the UK which is the single largest source of early stage capital
• There is a growth in angels investing as part of a group of angels (rather than as solo investors) with the average syndicate comprising 8 members
• Women angels are also becoming increasing common (now 14% of all angels) and there is also a rise in younger investors who are younger than 35 (16%) which probably reflects young entrepreneurs exiting high grown technology driven SMEs
• Traditionally angels invested in their local area, but geographic distance now appears to be less important in the investment decision
• The vast majority of angels (90%) make use of the tax breaks available through Seed EIS (50% income tax relief on amount invested) and EIS (30% income tax relief on the amount invested). If the investment is held for 3 years then there is also no Capital Gains Tax on Seed EIS and EIS investments
• If making 10 investments:
o 1 should return in excess of 10 times the initial investment
o 2 should return 6 – 10 times the initial investment
o Over 4 should return in the range of 1 – 5 times the initial investment
• Investments in businesses focused on social impact as a primary objective (i.e. social, environmental or community objective) are growing and now account for around 24% of total investment deals
• Angels are co-investing with a wide range of sources including crowdfunding
• The most popular sectors for investment include ICT/software, healthcare, food and drink, digital media and professional services
• Outwith London and the South East there is a low level of investing in creative industries
As regards Scotland, I have noted the following recent developments:
• The number of angel syndicates and funds investing in early stage companies continues to grow; Marie Macklin (a Glasgow-based business and social entrepreneur) has recently launched Macklin Enterprise Partnerships with £5m for investment in early stage companies
• One of the largest investments has been in FanDuel, the web based fantasy sports game based in Edinburgh, which received $275m from various sources including Google Capital and Time Warner Investments. This company was originally based at Edinburgh University’s School of Informatics with initial support from Pentech Ventures and Scottish Enterprise
• A recent report by the Strathclyde Business School noted that Archangels (the Edinburgh based angel syndicate) has invested over £90m in 80 Scottish companies since its formation in 1992 and created nearly 3,000 jobs
• Aberdeenshire based brewer BrewDog has recently raised a record £5m in its first three weeks of its latest crowdfunding round
If you have any queries on angel investment then please contact Angus McGuire on 01383 721621.
UK Business Angels Report can be found at: http://www.lincscot.co.uk/media/54086/erc-angels-report..pdf
